INDIA BUSINESS WORLD - MAY 11th - MAY 31st - 2008
LAFARGE BUYS L&T’S READY-MIX ARM FOR $349M
LAFARGE, the world’s second-largest cement maker, has acquired Larsen and Toubro’s ready-mix concrete (RMC) business for $349 million (Rs 1,480 crore). The deal will give Lafarge access to 66 L&T plants and make it the country’s largest RMC maker. Each unit of L&T Concrete has a capacity to produce 5,000-6,000 cubic metres of concrete a month while the total capacity is estimated to be around 3-4 million cubic metres (MCM) per annum. RMC is widely used in the building and construction industry and L&T has a 25% market share in India.
Lafarge has routed the acquisition through its building material firm Lafarge Aggregates & Concrete. Lafarge is learnt to have informed the Paris stock exchange about the deal. Lafarge India is not a listed entity. “With this, we are taking a pioneering step in the emerging Indian market,” said Lafarge global chairman and chief executive officer Bruno Lafont in a statement.
Lafarge’s presence in this segment is negligible. Just a few months ago, Lafarge Aggregates & Concrete started its RMC operation in Raipur. L&T’s revenues from the RMC business are around Rs 1,000 crore. For Lafarge, which has a strong presence in eastern India, the acquisition of L&T Concrete would also give it the much-needed pan-India character.
In December last year, L&T had decided to hive off its RMC business into a separate entity. Although L&T sold its cement business to the Birlas a few years ago, it retained the ready-mix concrete unit. Leading manufacturers Holcim, AV Birla Group and Heidelberg were also in the race to buy the business. L&T has been unable to manage the RMC business as it is spread across the country through small units. “It is difficult to manage these units. Our construction business is growing and we are bidding for projects with a turnover of at least Rs 200 crore,” said an executive. The AVB Group’s cement firms, Grasim and UltraTech, are active in the RMC business while Holcim group company ACC also has a strong presence in this segment.
|
