In most of them we arrive in cement production limit

Seven years after landing on the Indian subcontinent, via acquisitions to the industrialist Tata Steel of two cement plants in the East of the country, followed by a third in 2001, Lafarge laid last week the first stone of a new production unit that double to 3 million tonnes per year, the capacity of the site of Sonadih, in the State of Chhattisgarh. This investment of EUR 140 million will help the number one global building materials to reinforce its presence in this region, where it holds a market share of 20. At the same time, the group led by Bruno Lafont attack North, with construction in the State of Himachal Pradesh of a cement plant with an annual capacity of 3 million tonnes, with 160 million euros.

This conquest strategy is based on the belief that strong economic growth (more than 8 per year) of the India will lead to a boom in demand. Despite its huge population 1 billion population , the country consumed 136 million tons of cement in 2005 (against 22.5 million for the France), is 122 kilograms per capita, from 660 kilos for a Chinese. Lafarge has first resorted to external growth at a time where the local actors knew a delicate period, with spare production capacity, to pay the first acquisitions (4 million tonnes of capacity) to 72 dollars per tonne. Since the market took off, cement in the country turn to 90 of their capacity and their owners require 180 dollars per tonne to be separate.

Operate quarries

The second step resulted recourse to internal growth, become significantly less expensive than acquisitions, increasing capacity of 1.5 million tonnes already achieved is being made at a price of $ 60 per tonne. Two production units announced return to 67 dollars per tonne for one, $ 90 for the other. "We have so far invested 300 million dollars in India and have covered the cost of the invested capital in three years," explains Bruno Lafont. The 450 million for two new cement plants will enable the group to produce 12 million tonnes in five years with "other issues in the study, to be present in two or three regions.

Remains to manage internal growth which does not possible acquisitions in a poor country in limestone, raw material of cement. A dozen sites only allow operate quarries, and most are distant centres of consumption. When they create a cement plant near a career, Lafarge and competitors must therefore treat especially the transport and logistics of this heavy material that is cement. "By chance, the Indians have inherited the British of a good network rail freight", said Martin Kriegner, in charge of the Asia region for the company.

Beyond that, the Group intends to enjoy its other trades of the revival of the India. In Rajasthan, in the West, he plans to build a small plant of gypsum and reflects also to launch its activities of concrete aggregates and employment.

"It is a perfect example of our strategy of development in emerging countries," concluded Bruno Lafont. In most of them, we arrive in cement production limit. Hence our plan of creation of 30 to 40 million tonnes of additional capacity in five years. "This effort represents, in volume, 1.5 times the size of the British Blue Circle cement, bought by Lafarge in 2001.