Lafarge acquires Raymond's unit

By Our Staff Correspondent

MUMBAI, APRIL 28.The French multinational Lafarge will acquire the 2.24-million tonne Bilaspur cement unit of Raymond Ltd. for Rs. 785 crores, consolidating its hold on the Eastern markets.

This follows an agreement between Lafarge and Raymond here yesterday.

The deal, however, is subject to necessary approvals and satisfactory completion of all terms and conditions as per the agreement.

This is the second major acquisition by Lafarge in the Indian cement sector. The company now has a 2 million-tonne cement plant in Jamshedpur. Lafarge, it may be recalled, entered India - the eastern market, more precisely - by acquiring Tisco's cement operations in November last.

With the Raymond unit, Lafarge will have a total cement capacity of 4.24 million tonnes.

Mr. Gautam Hari Singhania, Managing Director of Raymond said, ``We have been working on the company's restructuring for some time. This is a significant step.''

Raymond is the flagship of the Vijaypat Singhania group. The group is known for its worsted suiting fabric and other woollen products. Raymond's cement division has a strong market position in West Bengal, Bihar and the North-Eastern States. A dry-process plant, the Bilaspur unit in Madhya Pradesh has consistently operated at high capacity levels and has numerous awards to its credit for productivity and efficiency.

Lafarge expects to improve the performance of the cement division through know-how transfer and process enhancements.

Mr. Thomas Farrell, Chief Executive Officer of Lafarge's Indian operations, said, ``Due to the proximity of Raymond's cement plant to our key East Indian markets, this acquisition is an important strategic step for Lafarge, providing considerable synergies with our existing operations.''

Lafarge group is a world leader in construction materials including cement, concrete, aggregates, roofing, gypsum and speciality products.

Mr. Singhania said, ``Our paradigm is to focus on our core business. We are today one of the world's largest fabric manufacturers. Raymond is a dominant brand in the Indian textile market and we have a significant presence in readymades, with our brands Manzoni, Park Avenue and Parx. The next step is to further consolidate our domestic presence and strengthen ourselves abroad.''

Our Special Correspondent adds from

Chennai:

With the acquisition of Raymond's cement operation, Lafarge is expected to emerge as a dominant player in the East with a market share of over 21 per cent. Though ACC commands a share of 17 per cent in the region, the combination of ACC and Gujarat Ambuja (which has picked up a little over 7 per cent stake in ACC from the Tatas) would be holding jointly 23 per cent share of the Eastern market. A top industry source in Chennai said, ``it is good for Lafarge''. The multi-national had flexed its muscle enough to make its presence felt in the East.

Having driven home its point clearly, observers feel, Lafarge may not indulge in price-hammering. In fact, cement prices have shown signs of firming up and ruling around Rs. 150-155 a bag in the region. One view is that the two top players will see sense and co-operate. ``In view of the consolidation, we expect the price discipline to be enforced,'' an industry expert says.

Cement industry sources in the West, however, feel differently. They are of the view that Lafarge has paid a ``little too hefty'' price for the Raymond's operations. With the markets in Uttar Pradesh and Bihar being what they are, only West Bengal provides opportunity for the cement makers, they say. The incidence of freight, according to them, will prove a handicap for cement manufacturers to feel comfortable selling in West Bengal.

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