This week, LafargeHolcim group stepped up its efforts to expand its operations in the high-growth Indian cement market. Both ACC Ltd and Ambuja Cement, subsidiaries of LafargeHolcim that control a combined 63Mt of capacity, have announced new capex programmes. LafargeHolcim controls a 63.11 per cent stake in Ambuja Cement and Ambuja Cement has a 50.05 per cent shareholding in ACC Ltd, with LafargeHolcim also having a 4.48 per cent direct shareholding in ACC Ltd.
ACC Ltd greenfield plant and additional grinding capacity
ACC Ltd (LafargeHolcim group) announced a large expansion programme for its cement business in India, including a greenfield integrated plant in Amehta, Madhya Pradesh, expansion of two grinding plants in Uttar Pradesh, plus a 1.1Mta expansion of the Sindri grinding plant in Jharkhand. The total capex addition will see 5.9Mta of cement capacity added to the Indian cement manufacturer's production capabilities, which currently stand at 33.41Mta.
ACC Ltd's Amehta cement plant near Katni will have a clinker capacity of 3Mta and a cement capacity of 1Mta. The company is setting up a new 2.2Mta grinding plant in Uttar Pradesh as well as expanding the Tikaria grinding plant by 1.6Mta. ACC Ltd has stated that these projects are estimated to cost INR30bn (US$4.1bn) and are scheduled to be completed in 2022.
Ambuja Cement expansion
Meanwhile, Ambuja Cement approved a 3.1Mta clinker line project in Marwar Mundwa, Rajasthan. The first phase will see installation of a 1.7Mta kiln line by 1H20, which will be followed by an additional 1.4Mta of clinker capacity and 1.8Mta of extra grinding capacity.
Ambuja Cement's pan-Indian cement business totals a clinker capacity of 17.7Mta and a cement capacity of 29.7Mta, including five integrated plants, with nine kilns, and eight grinding units.
The company has seen strong sales recently and recorded a 13 per cent net profit rise in 3Q18.
Housing and road demand
LafargeHolcim is expanding its reach in the Indian markets at the same time as India's government is pushing forward its domestic development agenda. The government has increased its focus on meeting the housing deficit through its 'Housing for All by 2022' programme, which will see 12m houses built as well as 10.2bn rural houses by March 2019, ahead of schedule. Public road construction has also seen the Ministry of Road Transport and Highways fund 17,000km of road construction in FY18, and this is set to accelerate to 32km per day by 2020.
"We are encouraged by the government's push on infrastructure and affordable housing which is driving growth in cement demand," said ACC Ltd’s Managing director and CEO, Neeraj Akhoury.
Ready-mix growth
LafargeHolcim also sees strong growth potential in the downstream markets of ready-mix in India. At its recent Capital Markets Day, it forecast ready-mix demand in India to expand at an annual rate of seven per cent to 81Mm3 by 2021, from 62Mm3 in 2017. There is still a long way for India's ready-mix sector to grow, as only seven per cent of India's cement in currently consumed by ready-mix, compared to 70-75 per cent in developed nations.
ACC Ltd has grown to produce 2.9Mm3 of ready-mix sales in 2017. It owned 46 ready-mix plants in 2013 and has 70 plants today. The projection is for the company to operate 140 ready-mix facilities by 2022. Read-mix sales for ACC Ltd grew by 12 per cent in 3Q18, an increase in part driven by the erection of eight new plants.
Meanwhile, Ambuja Cement purchases ready-mix from Aakash Manufacturing Co Pvt Ltd, in which it has a 20.02 per cent stake, and sells the ready-mix on to its customers.