ACC, owned by Switzerland-based Holcim Group, will invest Rs 3,300 crore over three years to increase its capacity by 16 per cent, to 35 million tonnes per annum from 30 mtpa.
The company would source the entire funding for expansion from internal accruals, Mr Kuldip Kaura, Chief Executive Officer and Managing Director, said. He was speaking to the media on the sidelines of the company's annual general meeting held on Wednesday.
ACC will set up cement production facility of four mtpa and a 2.79-mtpa clinker production facility at Jamul in Chattisgarh. The company will phase out the existing clinkering and grinding line at Jamul. Two grinding facilities will also come up at Sindri in Jharkhand and Kharagpur in West Bengal.
The company proposes to develop four coal blocks in Madhya Pradesh and one in West Bengal to secure its raw material requirements, said Mr Kaura without giving details on the proposed investment.
Demand improves
Cement demand across the country has improved in the last few months on the back of growing demand from infrastructure companies. The demand may sustain for a few quarters as the Union Budget has focused on developing infrastructure and boosting investment in affordable and rural housing.
Cement sales grew 9.7 per cent in February and 6.5 per cent between April and February this fiscal. Improvement in sales has also pushed up the industry capacity utilisation to 81 per cent in February.
“We believe economic development in India will create a robust demand for cement. Input costs may rise, putting pressure on our prices, but I am sure ACC will capitalise on every opportunity,” said Mr Narotam Sekhsaria, Chairman, ACC, in his address to shareholders.
Higher prices
Cement companies have hiked prices twice in the last two months to pass on cost increases. The new excise duty structure proposed in the Union Budget is estimated to put an additional burden of about three per cent per cement bag. But this could be partially offset by the removal of basic customs duty on coal. Cement is sold at Rs 320 a 50 kg bag in Mumbai.
The new rail freight rates announced in the first week of March would lead to a cost increase of about 20 per cent for cement companies.