Holcim losing India market share

Swiss multinational is now a distant second in the country’s cement market, behind Ultratech

The Holcim group — the world’s top cement maker outside China — continues to lose market share to its rivals in the Indian cement market.

The combined revenue market shares of ACC and Ambuja Cements — the two Holcim group companies in India — declined to a low of 17.1 cent in FY21. This is down from 18.8 per cent a year ago and a high of nearly 25 per cent in FY08.

As a result, the Holcim group is now a distant second in the domestic cement market in terms of revenues, behind Aditya Birla’s Ultratech Cement.

ACC and Ambuja Cements reported combined net sales of ~25,158 crore in the financial year ended December 2020 against industry’s combined net sales of around ~1.47 trillion during the financial year ending March this year. For comparison, Ultratech reported net sales of ~44,726 crore in FY21. (See the adjoining charts)

Switzerland-based Holcim was the world’s top cement firm (outside China) in 2020 with revenues of around 23.14 billion Swiss Franc (around ~1.85 trillion) and cement production of around 190.4 million tonnes.

ACC and Ambuja Cements follow the January-december financial year, while all other cement makers in the country follow the April-march format. The decline in Holcim group’s market share is largely attributed to a slow growth in production and sales of ACC and Ambuja Cement.

In the last five years, the combined net sales of ACC and Ambuja Cement grew at a compound annual growth rate (CAGR) of 3.4 per cent from ~21,259 crore in CY15 to ~25,158 crore last financial year. In the same period, the industry revenues grew at a CAGR of 6.4 per cent while Ultratech grew at a CAGR of 12.2 per cent from ~25,375 crore in FY16 to ~44,726 crore last financial year. Smaller players such as Shree Cement and Birla Corporation grew even faster. For instance, Shree Cement more than doubled its revenues in the last five years

The trend was similar during the first quarter of FY22. The combined net sales of ACC and Ambuja Cement were up 50.3 per cent YOY during the Apriljune 2021 period against 53.5 per cent YOY growth in the industry’s combined net sales in the period. As a result, the Holcim group’s revenue market share declined further in Q1 of FY22.

According to an analyst, one of the prime reasons for the decline in Holcim market share in India is due to its refusal to grow through mergers & acquisitions. In the last five-six years, toplisted cement companies such as Ultratech, Dalmia Bharat, Birla Corp and Nuvoco Vistas have largely grown through acquisitions, that is, by buying out assets under the bankruptcy proceedings or acquiring small regional players.

In contrast, ACC and Ambuja have stayed away from acquisitions and invested in expanding their own capacities. The two Holcim companies have also been far more conservative in their capacity expansion through organic routes compared to industry peers such as Shree Cement and Ramco Cement.

The Business Standard analysis is based on historical annual net sales of 30 listed and unlisted cement makers in the country since FY08. Many of these have since merged or been acquired by other companies.

Holcim had acquired ACC in 2005 from Ambuja Cements (Gujarat Ambuja Cement then) and around a year later it also acquired majority control in Ambuja Cements from its promoters. Holcim transferred its stake in ACC to Ambuja Cement.

This resulted in ACC becoming a subsidiary of Ambuja Cement.