Larsen and tubro close to selling its Ready mix concrete business

French cement major Lafarge SA, the world's second-largest cement maker, has emerged the frontrunner in the race to acquire the ready-mix concrete (RMC) business of engineering and construction major Larsen & Toubro (L&T). Deal size estimated at over Rs 1,000 crore.
The construction giant sold its cement business to the Birlas in 2003, now UltraTech Cement, but retained the RMC division. The company is the leader in the RMC segment with a market share of 25 per cent. The revenue is Rs 1,000 crore annually.
L&T has 66 RMC plants across the country with an overall annual installed capacity of around 4 million cubic metres. Twenty five of these plants are in the south, while the rest are in the west and the north. Industry analysts said RMC constitutes 3 per cent of the total cement business at present, but the growth opportunities are enormous with spending on infrastructure on the rise.
Lafarge currently has three cement plants in India, two in Chhattisgarh and a grinding station in Jharkhand. It is expanding capacity in Chhattisgarh and Himachal Pradesh, taking its overall capacity to 12 million tonnes by 2010 from the current 6 million tonnes.
L&T would be losing out around 4% of its turnover if this deal goes through. But at the same time it is likely to get a good price for the business and could see an upside from the current levels. I would recommend that one adds in tranches and act according to the actual information flow regarding the deal price from the company.