The Hindu Business Line : Lafarge says long-term prospects good

Building growth
Plans to take RMC units to 100 over next 12-18 months.
Looking at training and technology development.
Expects infra development to play an important role.

A file photo of a ready mix concrete in action

R. Balaji

Chennai, Dec. 31 Lafarge India Pvt Ltd is betting on public infrastructure development to drive its Ready-Mix Concrete (RMC) business in the coming years. Despite the present slowdown, the company is confident on India’s long-term prospects, and its expansion plans are on track, says Lafarge.

Earlier this year, Lafarge India acquired L&T’s ready-mix concrete business, making it the leader with close to one-fourth the market share. The company announced the acquisition of L&T Concrete in May 2008 and finalised the deal and transfer of business on October 23, according to the company’s spokesperson.

The acquisition has made it the largest player in the market dominated by four other players RMC, a UK company, Grasim, Ultratech and ACC.

The company hopes to continue with its expansion plans to take the total number of RMC plants it has to 100 over the next 12-18 months. Lafarge now has around 70 RMC units operating across the country with a total capacity of about 4.2 million cu. m. of concrete a year. The expansion would take its RMC capacity to about 6 million cu.m. a year, say informed sources.

Tapping potential

The location of the plants would help it tap the market potential offered by all the major growth areas — Chennai, Bengaluru, Hyderabad, Mumbai, and Delhi which covers the NCR, Punjab, Ahmedabad and Kolkata.

While the slowdown has hit the business, with construction activities slowing down across the country, Lafarge expects infrastructure development to play an important role in contributing to the business in the immediate future.

With the governments focussing on a wide range of infrastructure development, increased urbanisation and road connectivity, demand across the country would be positive, feels Lafarge.

Infrastructure now provides about 25 per cent of its business. Lafarge has studied the market in detail prior to the acquisition and is confident on the long term strengths of the markets here.

The low penetration of RMC in the construction sector in India represents a major opportunity for growth.

Globally, over 60-70 per cent of cement use is in RMC form in the construction industry but in India, it is just about 5-6 per cent. So it is a matter of time before ‘site-mixed’ cement gives way to RMC, the sources said.

Job creation

Lafarge is looking at the expansion programme in an integrated way. There would be significant direct employment generation which industry estimates put at 6-8 per plant apart from 8-10 trucks/plant and the personnel needed for the delivery.

The company is looking at training and technology development with plans to set up regional laboratories to assess the optimal mix requirements and a ‘school plant’ to train personnel to operate the company’s plants, the sources said.

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