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Case Title:

Lafarge: Concretising Indian Presence by Acquiring L&T’s RMC Division

Publication Year : 2010

Authors: A Chakraborty, S Chhaochharia, S Chaganty

Industry: Building Materials and Construction Equipment

Region:India

Case Code: MAA0197IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
Lafarge, the world's second largest cement maker had dominated the global cement market since its establishment in 1883. The company solidified its base in the French cement sector and went for aggressive expansion in the overseas cement market by restructuring its business mix. It entered into the India cement market in 1999 by acquiring the cement division of Tata Steel. Sensing future opportunities in the Indian ready mix concrete (RMC) sector, Lafarge acquired the RMC division of Larsen & Toubro Limited (L&T) in May 2008 for 14.8 billion rupees ($349 million). The expansion was in line with Lafarge's focus on expanding its operations in the Indian RMC market. In India a negligible portion of the cement produced was consumed by the RMC sector. Post acquisition Lafarge had planned to set up 10 additional RMC plants in India with an investment of around $150 million. It had also planned to capture 25% of the Indian RMC market. It thus remains to be seen whether acquiring the RMC division of L&T helps Lafarge to cope with the increased competition and successfully achieve its targets in future.

Pedagogical Objectives:

  • To understand the developments in the Indian cement industry and RMC sector
  • To understand the growth strategies of Lafarge.
  • To have a brief understanding about the strategies adopted by Lafarge to be successful in the Indian RMC sector.

Keywords : Indian cement sector, Global cement industry production, Major players of Indian cement sector, Control phase, partial decontrol period, Lafarge India Private Limited, Ready mix concrete (RMC) market, Operating performance of Indian cement industry, Larsen & Toubro (L&T), Aggregates and concrete, Business segments of L&T, RMC cost structure, Engineering and construction, Machinery and industrial products, Cement, Gypsum

Contents : 
Indian Cement Industry and RMC market: A Brief Overview
World Cement Production
Operating Performance Trend of the Indian Cement Industry
READY MIX CONCRETE (RMC)
Lafarge: World’s Second largest Cement maker
Brief History of Lafarge Group
Lafarge’s Cement Plants and its Markets in India
Segmental Performance of Lafarge Group

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