Indian producers line up for LafargeHolcim's Sri Lankan operations

A shortlist of potential buyers in the sale of LafargeHolcim's Sri Lankan operations have been named as Dalmia Bharat, Shree Cements along with Ramco after an initial round of screening. The global cement major is divesting its business in Sri Lanka as part of a global portfolio realignment.

With an estimated 2.3Mta grinding capacity and a 1.8Mta clinker capacity, it currently controls 40 per cent of the 6Mta Lankan market, said analysts tracking the sector. To put it in perspective, the cement capacity in the city of Mumbai alone is 8.5Mta.

Holcim first took over a state-run cement factory in Puttalam on the west coast of Sri Lanka from a Pakistani firm, which bought it during a privatisation drive over two decades ago. Last year the company sold 1.7Mta of cement, according to published data. Sources said the Lafarge-Holcim assets may get valued up to US$300m.

This implies a per tonne valuation of INR7000m-7500m, which according to analysts is comparable with Indian peers. At present, Sri Lanka's per capita cement use is 200kg/person, also similar to that of India.

Standard Chartered Bank is advising LafargeHolcim to sell the Lankan assets. When contacted Dalmia and Baring Asia spokespersons declined to comment on market speculation. "We have been shortlisted but we are in the process of evaluating the opportunity. In a week's time we will take a final call," HM Bangur, managing director, Shree Cements told the Economic Times.

However, AV Dharmakrishnan, CEO of Ramco Cements, denied that they are in the fray, reported the Economic Times.