INDIA: ACC will expand Jamul clinker unit

To raise cement capacity for retaining leadership

Swiss MNC Holcim controlled ACC and Ambuja Cements combine, which currently rules over the Indian cement market with a capacity of 57 million tonnes per annum is now boosting its capacity to ensure it does not get overtaken by AV Birla controlled Ultratech the number two player, which is planning to increase its capacity to 61 million tonnes per annum (mtpa) by 2014.

ACC on Wednesday said the company will set up a new clinker production facility of 2.79 million tonnes per annum and allied grinding facility at Jamul, Chattisgarh. The existing clinkering and grinding lines at Jamul which include a clinker capacity of 0.76 mtpa and cement capacity of 1.58 mtpa will be phased out. “The total cement capacity will be around five mtpa in Jamul, by 2015,” said a company official on condition of anonymity adding that going forward there will be more expansion plans that will be announced by the company but declined to give details on it. When it reaches the five-mtpa capacity at Chhattisgarh, ACC-Ambuja will have a capacity of around 60.5 mtpa.

ACC is planning decentralised grinding stations which will use clinker produced at Jamul, said a company statement. The project will be implemented in a phased manner and is scheduled for completion by June 2015, the company statement added. The project involves expanding the capacity of cement from 1.58 mtpa to around five mtpa and expansion of clinker capacity of 0.76 mtpa to 2.79 mtpa.

“The clinker expansion will require around $300 million approximately,” said Rajesh Kumar Ravi, an analyst at Karvy Stock Broking. An ACC spokesperson declined to disclose the cost of the capacity expansion or confirm the capacity expansion figures. Ravi said that as on December 31 ACC has cash balance of around Rs 1,700 crore and liquid investment of around Rs 1,200 crore.

Analysts believe that to maintain its top slot in the worlds second largest cement market, the Holcim controlled companies will have to add further capacity as its nearest competitor UltraTech has already announced its expansion plans.

V Srinavasan, an analyst at Angel Broking said, “ACC will have to expand its capacity to maintain its number one position. As one of the oldest cement company in the country, it is phasing out its old plants and is focusing on brown field expansion. Compared to Ambuja and UltraTech the cost of production in the old plants at ACC is higher.”

In a bid to wrest the number one position in India’s cement market, in terms of capacity UltraTech Cement plans to invest around Rs 11,000 crore to boost its capacity by 9.2 million tonnes over the next three years. UltraTech is planning for organic and inorganic growth to raise capacity from 52 million tonnes to around 75 million tonnes per annum over the next few years.