Cementing Proposition

Aspate of mergers and acquisitions has marked the Indian cement industry in the past couple of years.

News reports peg the volume of capacity that has changed hands at 47 million tonne, valued at over Rs 36,000 crore.

Lafarge and Holcim have merged. Heidelberg Cement has bought a stake in Italcementi. UltraTech bagged Jaypee’s 5 million tonne capacity in Madhya Pradesh. Birla Corp bought over the 5 million tonne a year (mtpa) capacity Reliance Cement.

The big question: Should cement end-users take an interest in these mergers and acquisitions (M&As)? And, the answer is ‘yes’.

How M&As impact cement end-users

Consolidation activity impacts end-users of cement by usually enhancing the merged company’s potential to invest in performance and process improvements and quality control, which in turn impacts product quality.

Performance measured in terms of improved operating parameters like power and fuel consumption is predominantly a key industry objective – especially in a difficult, low-price environment – for contributing to company profits. But process improvements and quality control have a major impact on end-users.

“Both process investments (in the plant) and investments in testing methodology help check the consistency of cement quality, which is essential to make high- performance concrete with the required workability, compressive strength and durability,” says Anil Kumar Pillai, Deputy General Manager, Technical Services, The Ramco Cements.