ACC plans capex of INR33bn in 2013

ACC plans capex of INR33bn in 2013
Published: 08 April 2013


ACC Ltd, India's second-largest cement producer, has planned a capital expenditure of INR33bn (US$603.9m) in 2013, most of which will be used for the expansion of an existing unit at Jamul in Chhattisgarh.

ACC has started work on the Jamul expansion project, which will add 5Mta of capacity, Chairman NS Sekhsaria said while addressing shareholders at the company's 77th annual general meeting (AGM).

The expansion, to be completed in a phased manner by 2015, will take ACC's total capacity to 35Mta. ACC is India's second-largest cement maker by capacity.    

Part of the capital expenditure may also be used for de-bottlenecking of some units, which is a "regular and ongoing" process, CEO and Managing Director Kuldip Kaura told reporters on the sidelines of the AGM. The company will fund its capital expenditure through internal accruals.

Cost cutting

Even as ACC is taking several initiatives to cut costs, Kaura said, high input costs remained a challenge. The company has been undertaking initiatives for using alternative fuels to reduce its dependence on thermal power, as prices of coal remain elevated.   

 "The company generated 42.33MW of wind power from its three wind power stations located in Rajasthan, Tamil Nadu and Maharashtra," ACC's Annual Report for 2012 stated.    

ACC is in the process of setting up a waste heat recovery power generation unit at Gagal in Himachal Pradesh, which when completed, will have a capacity to generate 45 mln units of green power per year.   The first phase of this unit will have a capacity of 7MW and will be operational this year.

Demand outlook

Demand remained lower-than-expected in Jan-Mar, which is typically a seasonally strong quarter, Kaura said. ACC's capacity utilisation is currently at around 80 per cent due to lower demand.
Demand for construction material has remained low for the past few quarters, as infrastructure and real estate activity across the country remains subdued amid weak economic growth and high interest rates.  

"The Indian economy experienced a slowdown in the year 2012," Sekhsaria said. "This affected all sectors including the cement industry. However, following some sighs of a general revival, cement is expected to perform well in the coming years."

Competition Commission ruling

The Competition Appellate Tribunal has concluded the first hearing in the cement price cartelisation case, and ACC is hopeful it may give its judgement this month, Kaura said. In June 2012, the Competition Commission of India had imposed a penalty on 11 cement companies. ACC said it has so far not made provisions for the INR11.48bn penalty levied on it, as it believes it has good grounds for a successful appeal.