World’s largest cement producer, Lafarge Holcim is planning on fully divesting its Sri Lankan operations, its subsidiary Holcim Lanka as part of a global rationalization strategy of the Switzerland-based building materials group.
According to informed sources who did not wish to be quoted, despite the Sri Lankan operations being a very profitable one, the decision to exit operations has been made in the context of an earlier announcement of the group planning to divest 3.5 billion Swiss Francs (Approx Rs.521.5 billion) worth of assets globally by the end of this year, with a view to generate cash.
“Lafarge Holcim announced a CHF 3.5 billion divestment target for 2016 at the end of last year. As part of this intention and the Group’s ongoing portfolio management, Lafarge Holcim is reviewing its portfolio. The Group already announced transactions in Morocco, South Korea, and Saudi Arabia on March 17. As part of this divestment program, we are currently exploring a range of options including the divestment of Holcim Lanka. Lafarge Holcim will provide regular status updates during the global divestment process,” Lafarge Holcim’s spokesperson, Eike Christian Meuter told Nation in an emailed response on Friday.
Local media reports said at least three Sri Lanka-based firms are vying to buy the firm “including a diversified listed company and a politically prominent privately-held business group”.
Lafarge Holcim, which operates in 90 countries, was formed in July 2015 by the merger of cement companies, the Swiss-based Holcim and French-based Lafarge creating a new leader in the building materials sector. However, following the merger, the group faced problems in continuing Lafarge units in India with the Competition Commission of India (CCI) directing the group to divest a part of its cement assets over antitrust concerns.
Last month, Lafarge Holcim Group said it posted a first-quarter net loss of US$ 48.38 million due to weaker-than-expected sales, though noting it remains on track to deliver its longer-term targets amid “challenging economic headwinds” in emerging markets.
Holcim Sri Lanka, which is not a public listed company in Sri Lanka has an employee strength of approximately 1500 and operates an established network of distributors island wide.
The local unit last month announced it has begun operations of a new ship-to-rail road hybrid model for the transportation of its raw materials. The firm said Sri Lanka Railways will transport Holcim cement related raw materials by rail from the Eastern port of Trincomalee to the Mahawa railway station where the company’s dedicated trucks will then transport the materials to the Puttalam Cement Works Plant.