Lafarge Likely to Takeover Small Cement Cos in South India

If Lafarge India goes ahead with its latest expansion plan, entrepreneurs of several small-scale cement plants in South India will heave a sigh of relief. Lafarge India, the Indian unit of the French cement-making firm, is planning a cluster approach to foray into the South Indian cement market and acquire small cement plants in the region.

With small cement players in the region struggling to sustain business in the face of stiff competition posed by the big firms, the acquisition could prove to be a boon for the former. “Small-sized cement units in South India are unable to make their business viable, as the presence of big players in the sector is fast-increasing. Under such circumstances, handing over the firms to a major player like Lafarge could be a wise decision for the entrepreneurs of the small units,” said AK Bhasin, Proprietor of Sigma Construction, a small-sized construction company in Kolkata.

Tough time for small units

The South India market has been consistently profitable for most investors over the years. Almost every state in the region has a number of clusters, which mainly comprises small and micro units. In the cement industry, there is a cluster in Gulbarga in Karnataka with more than eight plants and a total capacity of 14 million tonne (mt).

“Small cement players in Karnataka have great potential, but they are unable to scale greater heights due to the growing presence of the big cement makers. As a result, the entrepreneurs of these units are going through a tough time. If they are given the option of selling out their plants, they are likely to accept the offer in view of the market scenario,” said RV Ganmukhi, Proprietor of Infinity Fab Engineering Company, a small-scale construction company in Belgaum, Karnataka.

The present annual capacity of Lafarge India stands at 5.5 mt, which the company hopes to push up to more than 20 mt after the completion of its projects in Chhattisgarh and Himachal Pradesh and setting up plants in Rajasthan, Meghalaya and Karnataka.