ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Cement Shows the Way

WEEKLYECONOMIC AND POLITICAL Cement Shows the Way Recent developments in the cement industry highlight certain positive trends in the economy and also certain negative policy hangovers from the past. The desirable trends are those pointing to industrial restructuring and consolidation both through mergers and acquisition and through divestiture. A problem highlighted is the policy prescription against financing by Indian financial institutions of takeover of Indian firms by foreign companies.

Recent developments in the cement industry highlight certain positive trends in the economy and also certain negative policy hangovers from the past. The desirable trends are those pointing to industrial restructuring and consolidation both through mergers and acquisition and through divestiture. A problem highlighted is the policy prescription against financing by Indian financial institutions of takeover of Indian firms by foreign companies.

There have been three major cement acquisitions in the recent past. Lafarge has taken over the cement divisions of Tisco and Raymond. Gujarat Ambuja has taken over DLF Cement and ACC. Cement Francais has taken over Zuari. There have been other minor acquisitions such as of Shez cement by a member of the Raasi cement family, takeovers by India Cement, etc. Gujarat Ambuja has shown itself to be the nimblest among the Indian cement majors. Its acquisition of control of ACC might have raised some hackles in some quarters but has greatly added to its market clout. The use of coastal shipping to slash freight costs and the resultant breaking out of the geographic restriction of competition have also pointed to the company’s innovative capacity. However, Gujarat Ambuja and other major Indian cement companies are going to face stiff competition from foreign companies.

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