Conch Cement , JSW Cement, Nirma, Cemex and Piramal Enterprises submitted final bids for Lafarge's Indian assets, Indian media LiveMint reported, citing unnamed people familiar with the matter. The bidding price is between 80 billion and 90 billion rupees.
Earlier this year, Lafarge (India) proposed to the Competition Commission of India (CCI) to sell its assets with an annual capacity of 11 million tons. Initially, as part of the Lafarge-Holcim merger agreement, CCI asked Lafarge to sell 5.2 million tons of its production capacity in Chhattisgarh and Jharkhand in eastern India. But the deal relied on the original buyer, the Birla Group, to secure limestone mining rights, which the group failed to do. Since then, Lafarge India has been sold as a whole, including the transfer of mining rights.
According to the global cement catalogue and research in 2015, India had 174 integrated cement plants in 2014, of which 155 were in operation, with a total production of more than 301 million tons per year. In addition, there are 91 grinding stations with a production capacity of more than 109 million tons per year. There are also some cement plants and grinding stations that cannot be counted. Lafarge's sale of assets is not huge in terms of India's overall cement production capacity, but it is very realistic as a springboard for domestic cement companies to open up the Indian market.
India is one of the BRICS economies, and its economy is developing rapidly. In 2013, India's GDP was $1.49 trillion, with a growth rate of 3.2%. In 2014, GDP by purchasing power (PPP) was $7.28 trillion, making it the third largest economy in the world. Experts expect India's cement industry to improve significantly in the coming years. Per capita cement consumption will increase from 185 kg in 2014 to 385-415 kg in 2025, according to a report by AT Kearny, a management consultant. At the same time, the demand for cement will increase by 2.5 to 2.7 times to 550 to 660 million tons per year. Infrastructure construction is expected to drive growth, and the housing market will continue to be the largest consumer, accounting for 42% -45% of total demand.
It is worth mentioning that although Holcim and other international enterprises have cement production capacity in India, domestic cement enterprises in India still dominate, such as UltraTech, Chettinad, JK, Dalmia Group, India Cements and so on. Conch's bid for Lafarge's Indian assets is undoubtedly a key part of the company's entry into the Indian market, but in view of the complex social and industrial environment, it is particularly necessary to establish effective cooperation with local enterprises.
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