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LafargeHolcim mulling divestment of cement factories

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New Delhi: After scrapping the sale of two of its India cement plants to Birla Corp, LafargeHolcim Ltd today said it is considering divestment of the Jojobera and Sonadih units. Lafarge had in August agreed to sell the two factories in Jharkhand and Chhattisgarh to Birla for Rs 5,000 crore to comply with antitrust regulations as it was merging with Holcim Ltd.

“LafargeHolcim today announced that it is considering a divestment of its interest in Lafarge India with an annual cement capacity of around 11 million tonnes,” the company said in a statement today.

The divestment, it said, would require the approval of the Competition Commission of India (CCI) as an alternate remedy for the merger of the Group’s legacy companies. LafargeHolcim was formed in July and is now the world’s biggest cement maker with a market value of USD 25 billion.


“The Group is no longer in discussion with Birla Corporation Ltd (BCL) for the sale of the Jojobera and Sonadih cement plants in Eastern India that was announced earlier,” the statement said.

It however did not explain the reasons for scrapping the deal. The BCL proposal involved the divestment of 5.1 million tonnes capacity by Lafarge India. Both BCL as buyer and the sale agreement with BCL were subject to approval by the CCI along with other regulatory approvals and customary conditions.

“Due to the current regulatory issues relating to the transfer of mining rights captive and critical to the two plants, LafargeHolcim was obliged to submit an alternate remedy to the CCI to ensure compliance with the order. The alternate remedy is now under consideration by the CCI. The Group remains in dialogue with the fair trade regulator and will communicate any further updates to the divestment process in India in due time,” it added.

The two cement plants have a total annual capacity of about 5.15 million tonnes and own reserves of limestone, the raw material used to make cement. Birla Corp was to acquire Lafarge India Pvt Ltd’s (LIPL) cement business, which comprises an integrated cement unit at Sonadih (Chhattisgarh), a cement grinding unit at Jojobera (Jharkhand), along with Concreto and PSC brands.

The acquisition would have added an additional cement capacity of 5.15 million tonnes per annum (MTPA) to Birla Corp’s kitty and would have helped the firm consolidate its position in the eastern India cement market. The firm has a total operational cement capacity of about 10 MTPA with units in Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal.