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Lafarge Changes India Biz Strategy, To Chase Organic Growth

20 March, 2012

World’s largest cement company Lafarge, which has been on a selling spree globally to reduce debt from its books, is tweaking its India expansion plans from acquisition led strategy to organic expansion, its global chief said on Tuesday.

Bruno Lafont, chairman & CEO of Lafarge, said in a media gathering in Mumbai that the French building materials giant which competes with the likes of Holcim(controls ACC and Ambuja Cement in India) and Cemex globally said the firm continues to have expansion plans in India.

“When we came to India we had 1 million tonne capacity and now we have 8 million tonne. We continue to grow through internal expansions and green field expansions. We will also expand our concrete operations. We will invest in two main business that is internal development and innovation.”

Lafarge’s India story is marked by string of acquisitions, similar to most MNC cement firms who came into India. Lafarge had entered the Indian subcontinent with the acquisition of Tata Steel’s cement business in 1999, followed by acquiring Raymond Cement facility in 2001. To mark its presence in the concrete business it had also acquired Larsen and Toubro’s concrete business in 2008.

Industry sources say last year the French company was actively in talks with Meghalaya-based Star Cement for a majority stake and with Madras Cements for its grinding unit in West Bengal. Goenka’s promoted Madras Cement was finally sold off to JaiPrakash Associates.

Till now the company had said that it would look at inorganic ways to grow its business but now the company has changed its strategy.

Lafont said Lafarge will expand through greenfield route and it is not looking at acquisitions to expand business in India. “We are not afraid with issues of delays and environmental clearances. they are normal part of our business,” he added.

Lafarge is a major cement player in the eastern and central India. Last year it completed its grinding unit project in Jojobera in Jharkhand. According to Lafont, “We have selected east to focus on one region and we will select other places but not pan India strategy. We have more of a local strategy. We have earlier acquired limestone resources too.”

Lafarge today opened its innovation centre in Mumbai, a first for it in India which will undertake research and development for product innovations. Lafarge has been actively eyeing to enter the affordable housing segment with innovative products.

Lafont added, “We will be launching a new solution for mud houses with cement solution which is more sustainable and they will last five years without repair.”

As Lafont visited India, back home it successfully extended its syndicated credit facility by two years from July 2013 to July 2015 for a total amount of €1.2 billion. The extended facility, supported by 24 lenders, complements Lafarge’s bilateral lines of €2.2 billion and brings total committed credit facilities to €3.4 billion euros. Last week global rating agency Standard and Poors had revised Lafarge’s credit rating to negative as it views that Lafarge may not be able to improve its credit metrics in 2012. Globally, Lafarge has raised €2.2 billion in 2011 through divestments, including its profitable Gypsum biz.


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Lafarge Changes India Biz Strategy, To Chase Organic Growth

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