No impact on cement demand: ACC

January 12, 2010 5:22 am

Although a roll-back of the fiscal stimulus announced earlier this year by the Centre could see rise in prices of some products and services, cement major ACC doesn’t expect demand to be impacted.
“A retail customer who has planned to construct a house and budgeted for it will not cut back, if the price rise is announced. We will have to increase cement prices, if the excise cuts announced earlier are rolled back. As cement companies we got a benefit to the tune of Rs 4-5 per bag, which was passed on to customers,” said Sumit Banerjee, MD of ACC. He said the price rise would not be uniform, but be region-specific based on the demand and supply parameters. In the ongoing fiscal, India’s cement sector is witnessing a growth rate of 11 per cent though it is believed that over the next few years the growth would be around 9 per cent. He said ACC, now owned by Swiss giant Holcim, would expand the capacity of its Wadi facility in Karnataka to 8.8 mt up from the existing 5.8 mt. Eventually, this facility would boast of 13,000 tons per day kiln, the biggest anywhere in the world. While the Wadi plant expansion is slated to be ready by March/April next year, ACC is due to announce the start of its cement production unit in Bellary later this month or early next month. These expansions would see ACC’s capacity rise to 29.5 mt from the existing 22-22.5 mt. ACC, which would spend Rs 1,500 crore in capex this calendar year, also expects to ramp up its readymade concrete business.
The RMC arm, which boasts of over 25 plants nationwide and brings in around Rs 400 crore to Rs 450 crore in turnover, has not seen significant capex, as ACC put on hold investments after the Indian real estate sector, which is the major consumer of RMC went into a tail-spin on the back of the global economic crisis.