ACC capex plan on track, sees rise in demand

ACC capex plan on track, sees rise in demand
Published: 05 March 2009

ACC said that cement demand has increased in the semi-urban and rural areas of the country. Despite slowdown fears, the company plans to go ahead with its capacity expansion plans.

The company at present produces 22.4Mt of cement and plans to increase its capacity by around 9Mt by the middle of next calendar year. “The government’s initiative to lower the home loan rates has given a boost to the construction of individual homes in the semi-urban and rural areas,” J Datta Gupta, chief commercial officer of ACC told Financial Chronicle. He added that various ongoing infrastructure projects too have upped demand for cement.

The present cement demand is quite encouraging and the company wants to stay on course with its expansion plans, added a company spokesperson. The demand surge has meant increased sale of cement from the company. The company reported an increase of 7.7 per cent in the cement dispatch for January-February 2009, compared with the same period in the last fiscal year. In absolute terms, the dispatch of cement stood at 3.63Mt in January-February of the present year, even as dispatch figures for the corresponding period of last year stood at 3.37Mt.

The company also reported a 3.5 per cent increase in annual cement dispatches for February. The dispatch figures for February this year stood at 1.75Mt, while the same stood at 1.69Mt in February 2008.

Interestingly, the volume of cement dispatched in February (1.75Mt) is less than that dispatched in January 2009 (1.88Mt). “The dispatch figures vary on a monthly basis and these are just minor variations,” said the company spokesperson.

The housing and construction activities have got a boost after the incumbent government, as part of its fiscal stimulus package, made provisions for various economic incentives for the construction of homes that are priced at less than Rs 20 lakh. The effect has largely been felt in the semi-urban and rural areas because land is relatively cheaper and construction of individual homes is a feasible option for many individuals.