Mumbai, Dec. 15: A turf war is set to erupt in cement.
Holcim and the AV Birla Group, the main players, are pulling out all the stops to quickly ramp up capacities to snatch an edge in the fight for market share.
While Gujarat Ambuja Cements and ACC Ltd, which are controlled by Swiss major Holcim, are jointly investing Rs 3,000 crore to ramp up capacities, the AV Birla Group, through the two companies in its fold, has mapped out plans to raise the capacity to 45 mt in the next couple of years.
Gujarat Ambuja today informed bourses that its board yesterday approved a capital expenditure of Rs 1,519 crore on a new cement plant with a capacity of 3 million tonnes (mt) per annum and two split grinding stations in Himachal Pradesh, to be commissioned by March 2009.
The company said the merger of Ambuja Cement Eastern with itself would take its capacity to 16 mt. Statutory approvals have been obtained and the merger will get retrospective effective from January 1, 2006.
Gujarat Ambuja is also implementing a Rs 1,050-crore project for a 3-mt plant in Chhattisgarh and setting up another grinding station in West Bengal.
These will be commissioned by March 2009, by which time the Himachal Pradesh plant will also commence production, taking the company’s capacity to 22 mt.
The ACC board, too, has approved an investment of Rs 1,480 crore to raise the capacity of its Wadi plant in Karnataka by 3 mt, taking its capacity to 24 mt.
After ACC and Gujarat Ambuja’s expansion are over, the combined capacity of companies where Holcim has a controlling stake will be around 46 mt — 24 mt of ACC and 22 mt of Gujarat Ambuja.
If Holcim is pumping in around Rs 3,000 crore, Kumar Mangalam Birla’s AV Birla Group is not far behind.
Analysts said the AV Birla Group through a mix of greenfield projects and acquisitions plan to take the capacity of its cement entities Grasim and UltraTech, which was formed after the AV Birla Group acquired the cement division of Larsen & Toubro, to 45 mt in early 2009 from 31 mt.
Grasim Industries recently signed an MoU with Orissa for a 3.5-mt integrated plant in the Sundergarh district at an investment of Rs 1,200 crore. To be the largest cement facility in the state, the plant will be commissioned in three years.
UltraTech has drawn up a capital expenditure plan of Rs 2,698 crore for the next three years. This includes captive power plants of 192 mw aggregate capacity in Gujarat, Chhattisgarh and Andhra Pradesh and a brownfield expansion project of 4 mt in Andhra.
Holcim entered into a strategic alliance with the Ambuja group last year when it acquired a majority stake in Ambuja Cements India, which had a 13.8 per cent stake in ACC.
Holcim simultaneously made an open offer to ACC shareholders through Holdcem Cement and Ambuja Cements India to acquire a majority in ACC. After the open offer, Ambuja Cements India’s stake in ACC was 34.69 per cent.
Early this year, Holcim acquired a 14.8 per cent in Gujarat Ambuja from the two promoters — the Sekhsaria and Neotia families — for Rs 2,100 crore.
Holcim strengthened its hold over Gujarat Ambuja last month when it acquired 5 crore more shares, or 3.7 per cent equity, from entities controlled by the Sekhsarias and Neotias, taking its holding in the company to 18.5 per cent.
This will rise to 23 per cent following the merger of Gujarat Ambuja with Ambuja Cement Eastern.