ACC-Ambuja’s conservative approach has worked well, but now it might need to step out of its comfort zone

India’s second-biggest cement player has seen sticky growth, but competition has been far more aggressive 

Usually in horror flicks, when a group is chased, they lock themselves in some random house. After that they latch the main door and shutter the windows. Just as everyone sighs in relief, they hear the backdoor break open and the floorboards creak. Often, when preoccupied with the task at hand, we overlook the obvious. It can happen when running an MNC too, like it seems to have happened at LafargeHolcim’s India business. They were busy securing their house while competition has been aggressively running amok. The latest being Ultratech Cement’s Rs.55 billion investment to add 12.8 million tonnes to its existing capacity, in addition to the nearly 7 million tonnes in the works.

The story begins with Holcim’s entry into India in 2005, through a big-ticket transaction. The Swiss company joined hands with Gujarat Ambuja Cements to make a bid for ACC, as part of its $800 million investment in the subcontinent. It remains one of the largest foreign investments in the domestic cement sector. But, the aggression in expansion has whittled away.

In the past ten years, when Indian peers were buying out each other’s assets and smaller companies, LafargeHolcim’s ACC and Ambuja Cements chose to remain conservative. They stuck to their organic growth strategy, even when it cost them market share and valuation (See: Finding local favour). The two companies’ total capacity


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