Mazars to Mon­i­tor As­set Sale Process of Lafarge In­dia

Fair trade reg­u­la­tor CCI asks au­di­tor to en­sure com­pe­ti­tion laws are fol­lowed

The Economic Times - - Front Page - Ra­jat.Arora@ times­

New Delhi: The coun­try’s fair trade reg­u­la­tor Com­pe­ti­tion Com­mis­sion of In­dia (CCI) has ap­pointed French au­dit firm Mazars to mon­i­tor the di­vest­ment of French ce­ment gi­ant Lafarge’s en­tire In­dia op­er­a­tions.

Mazars will en­sure that the pro­posed as­set sale of Lafarge In­dia — for over­com­ing reg­u­la­tory hur­dles over its multi-bil­lion­dol­lar merger with Swiss ri­val Holcim last year — does not have any ad­verse ef­fect on com­pe­ti­tion in In­dian ce­ment mar­ket, a se­nior gov­ern­ment of­fi­cial said.

“This agency will re­view the po­ten­tial buy­ers and re­view the progress of the di­vesti­ture process. The agency would su­per­vise a swift com­ple­tion of di­vest­ment process and will also see that all com­bi­na­tion laws un­der the Com­pe­ti­tion Act of 2002 are fol­lowed,” the of­fi­cial said.

Com­pe­ti­tion Ap­pel­late Tri­bunal (Com­pat), which hears cases against CCI, early this month had put Lafarge’s di­vest­ment on hold till May 9 af­ter Dalmia Ce­ment ap­proached it. third party, Mazars In­dia, to su­per­vise di­vest­ment process of Lafarge In­dia as­sets stay on Lafarge In­dia sale till May 9 af­ter Dalmia Ce­ment ar­gued that CCI could not ap­prove stake sale un­til the ac­quirer was known CCI will now tell Com­pat that the mon­i­tor­ing agency will en­sure trans­parency Lafarge In­dia has 11 mil­lion tonnes per an­num ce­ment ca­pac­ity

Lauer­mann, how­ever, down­played the risk of job cuts, say­ing the plant re­cently added a third shift and as an em­ployer it is the or­gan­i­sa­tion’s duty to en­sure that the jobs are safe­guarded, even in dif­fi­cult times.

But Volk­swa­gen is down­siz­ing else­where to main­tain prof­itabil­ity, even as it tries to shrug off the ef­fects of the emis­sions scan­dal that still weigh on sales. It has re­duced the num­ber of shifts at plants in Ar­gentina, Rus­sia, Mex­ico and Brazil, re­sult­ing in job losses in those places.

Volk­swa­gen agreed to re­pur­chase or fix about half-a-mil­lion ve­hi­cles in the US in an ef­fort to tide over the scan­dal over us­ing se­cret soft­ware to cheat ex­haust emis­sion tests. This clean-up act is es­ti­mated by some to cost as much as $10 bil­lion. Cut­ting cost is one way to raise re­sources.

The trou­bles may spill over to In­dia as the man­age­ment told em­ploy­ees to brace up for the chal­lenge as the In- dian plant is “not in a strong po­si­tion place, ei­ther”. The Chakan fac­tory em­ploys more than 4,000 peo­ple. The In­dia unit ex­ports more than 50,000 units a year to Mex­ico, a mar­ket where it re­cently lost out on 2,900 units to Volk­swa­gen’s Kaluga plant in Rus­sia. With lo­cal sales re­main­ing weak, the Chakan fac­tory is sur­viv­ing pri­mar­ily on ex­ports. Any dent to its num­bers in a key ex­port mar­ket like Mex­ico, even from an­other Volk­swa­gen plant in a dif­fer­ent coun­try, will be a huge risk to the In­dia man­u­fac­tur­ing op­er­a­tions.

In the let­ter, the com­pany said if the In­dia unit loses any more pro­duc­tion, its fi­nan­cial sit­u­a­tion will come un­der the scan­ner and the op­er­a­tion may be ques­tioned glob­ally.

“It could even­tu­ally force us to come down from three shift op­er­a­tion to two and, in worst case, to a sin­gle shift op­er­a­tion. Need­less to say, this will di­rectly have an ef­fect on our jobs here at the Pune plant, since a sin­gle shift pro­duc­tion will re­quire con­sid­er­ably lesser work­force,” it said. “This sit­u­a­tion will with­hold all our fu­ture in­vest­ments and may also en­dan­ger the launch of our new com­pact sedan that is sched­uled in the sec­ond half of 2016.” Apart from look­ing at im­prov­ing ef­fi­ciency year on year, the com­pany is ac­cel­er­at­ing lo­cal­i­sa­tion. It has also been send­ing out a tough mes­sage to com­po­nent sup­pli­ers. “If the sched­ules are not met and if it im­pacts the pro­duc­tion, the ven­dor will be held ac­count­able with a penalty, which can range in sev­eral hun­dred eu­ros,” said one of the peo­ple in the know.

This was the sec­ond round of com­mu­ni­ca­tion with the em­ploy­ees af­ter a Fe­bru­ary 2016 meet where the man­age­ment talked about is­sues of los­ing pro­duc­tion to Rus­sia and em­pha­sised on main­tain­ing qual­ity, high stan­dard of dis­ci­pline and code of con­duct.

While the diesel­gate did hurt the brand glob­ally, the Chakan plant has been ramp­ing up pro­duc­tion thanks to ex­port de­mand and the up­com­ing com­pact sedan, Ameo. Volk­swa­gen added a third shift to its op­er­a­tion and hired 800 more peo­ple. On March 29, the com­pany crossed a crit­i­cal mile­stone of 500 cars per day at the In­dia fac­tory.

Volk­swa­gen said given the en­vi­ron­ment, it is ex­tremely crit­i­cal for each plant to show prof­itabil­ity to sail through this dif­fi­cult time.

“There is al­ready cut-throat com­pe­ti­tion in the au­to­mo­tive world and then there is some more across com­pany’s dif­fer­ent plants within VW world to grab ev­ery op­por­tu­nity and to get more pro­duc­tion vol­umes and utilise the re­spec­tive pro­duc­tion ca­pac­ity in a bet­ter way,” the let­ter said.

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