Big Deal in the Cement Industry!

India already is the second largest cement producer in the world.India’s overall cement production capacity was around 545 million tonnes in FY20.Around 98% is produced by private sector rest by public sector and the top 20 companies account of production i.e 70% of the total cement production in India.It is expected that till 2025 around 550-560 million tonnes will be produced because of the expanding divisions like housing,commercial construction and industrial construction.

The deal is between famous detergent maker Nirma and Lafarge cement. In which Nirma is in talks to buy the India business of Lafarge Cement in the deal of the value of Rs 9400 crore. By this, the soap to soda enterprise will become the sixth-largest manufacture in India. If the deal goes well then the company will take on brands like Piramal & JSW. Nirma itself is going to finance the acquisition with a mix of equity & debt. It will increase the cement business to around 13 million tonnes from 2 million tonnes in the state of Rajasthan.

Nirma’s MD Hiren Patel said that,”this will be an transformational and a landmark step for the company’s cement business”.He also added that strong platform like Lafarge’s India business,we plan to take cement business to next level.The best part of Nirma in many years has been that the products that they produce are at lower cost through which everyone can afford.As everyone knows it that Nirma has always given tough competition to the likes of HUL and P&G.It is one of the major players in the field of detergent & toiletries segments.

Nirma had a plan to build a large size cement unit in Gujarat but the plan failed due to environmental issues. But later in November, it commissioned its first cement plant in Rajasthan. The buyout will be the second acquisition after Jaypee Cement by Ultratech for Rs 16189 crore.Lafarge is trying to enter the deal so that its partnership with Swiss Holcim should conclude & operate as single operator in the country.Previously,it tried to sell part of its business to Birla Corp but due to issues of the law it could not.

Analysts expect that Narendra Modi led government has a confidence that it will boost the cement demand in the country.From an annual growth rate of 10% in 2008,of late the rate had fallen to 4% while the prices has came down from Rs 1300 per tonne to Rs 700 per tonne now.

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