LafargeHolcim announces divestment plan for Lafarge India assets
Mumbai: Two days after the India unit of LafargeHolcim called off its Rs.5,000 crore deal with Birla Corp. to sell its two cement units in eastern India, the Swiss-French cement giant on Thursday said that it will divest its interest in Lafarge India assets to comply with the competition rules in India.
In April last year, LafargeHolcim agreed to divest two of its Indian plants to win approval from the anti-trust regulator Competition Commission of India (CCI) to merge Indian assets of France’s Lafarge and Switzerland’s Holcim.
CCI gave conditional clearance for the merger after stipulating that the new entity should divest Lafarge’s 5.15 million tonnes cement capacity in east India.
In August 2015, the LarfargeHolcim agreed to sell Lafarge’s integrated cement unit at Sonadih (Chhattisgarh) and a cement grinding unit at Jojobera (Jharkhand) along with Concreto and PSC (portland slag cement) brands to Birla Corp Ltd for Rs.5,000 crore. The deal, however, was called off due to LafargeHolcim’s “inability to execute the deal”.
These units—with cement capacity of 5.15 million tonnes a year and mineral rights over limestone reserves—would have helped Birla Corp. strengthen its market position.
In a statement on Thursday, LafargeHolcim said that it is now considering a divestment of its interest in Lafarge India with an annual cement capacity of around 11 million tonnes. The proposed divestment is an alternate remedy for the merger of LafargeHolcim’s legacy companies, the company said.
The new Mines and Minerals Development Act does not allow transfer of mining rights of allotted mines. The deal with Birla Corp was subject to transfer of mining rights. “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, “ LafargeHolcim said in its statement on Thursday.
Meanwhile, Birla Corp is considering legal action against Lafarge. “The company has since discussed the matter with its legal advisors and has decided not to accept their contention and is in the process of taking appropriate legal measures in consultation with lawyers,” the Kolkata-based company said in a statement to BSE on Tuesday.
LafargeHolcim’s India presence comprises cement capacity held under three subsidiaries—Lafarge India Pvt. Ltd, ACC Ltd and Ambuja Cements Ltd. Post divestment of Lafarge’s 11 million tonnes, the merged entity would have a total capacity of about 60 million tonnes.