Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
ACC: Aggressive initiatives - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 15, 2002

    ACC: Aggressive initiatives

    ACC the largest cement producer in India has undertaken aggressive expansion and restructuring plans in order to improve efficiency and profitability. The recent moves seem to be a concerted effort by the company to catch up with its domestic peers like Gujarat Ambuja and Madras Cement on the efficiency front. Restructuring efforts range from capacity additions in its cement plants to cutting capacity at its refractory production.

    With a view that the cement demand in the country would show good growth rates going forward. ACC had undertaken a capacity expansion exercise in FY02, which included setting up of the 2.6m tonne Wadi plant. In the current year also the company plans to spend Rs 1.2 bn towards capacity expansion which will raise total cement capacity from existing 16 m tonnes to 17.3 m tonnes. The rational towards aggressive capacity additions over the last 3-4 years seems to be to create economies of scale and to extend its reach throughout the country. Large capacities have helped the company to considerably increase its dispatches in the current year.

    Growth in Dispatches (YoY)
    FY03 April May
    ACC 29.0 18.0
    Gujarat Ambuja 3.0 6.0
    Grasim 25.0 6.4
    L&T 12.6 1.8

    ACC has already turned around its Ready Mix Concrete (RMC) business. The Rs 900 m RMC division was incurring losses from the past two years. The company has decided to concentrate on the existing capacities and has shelved its capacity expansion plans. High sales tax imposed by state governments have made the business unremunerative. The turnaround has been mainly the result of better demand and firm prices.

    ACC has also initiated steps to prune its refractory business in order to make the operation profitable and efficient. The company has already closed down its Madhya Pradesh plant due to inefficiency. The company has stated that it plans to concentrate on core products and market penetration instead of diversification. Low utilisation levels in the industry (nearly 50%) may also be a major focus for the company. ACC is the largest producer of refractory in the country. With a good growth in the iron and steel industry (major consumers of refractory) forecasted the refractory industry is likely to see good times ahead.

    Apart form these measures the company has also initiated steps to improve the efficiency of its cement units. ACC has been reducing the utilisation levels at its old Wadi plant in order to divert production to the new Wadi plant which is much more efficient and enjoys sales tax exemption. Utilisation levels at the new Wadi plant have been increasing steadily. The company has also allocated funds to complete the installation of three captive power plants in the current year. This move will reduce reliance of ACC on state electricity boards thereby reducing the overall cost of power consumed.

    ACCís alliance with Gujarat Ambuja has helped the company immensely in terms of operational efficiency. The full impact of the alliance has started showing since FY02. The companyís operating margins have been steadily improving over the last two years. While the margins have improved they are still lower than industry leaders like Gujarat Ambuja and Madras Cement. The company has also initiated steps to divest from its non-core businesses. The most recent move was the selling of its stake in Tata Industries. The divestment will further release cash for the company, which can be used for further restructuring.

    The company has reported encouraging results for FY02. The companyís initiatives in the past year have had a positive impact on its efficiency and profitability. Going forward the company looks attractive, as it is likely to improve its margins further by concentrating on core products and businesses. All the current initiatives indicate the managementís seriousness and commitment to be the best in the industry.



    Equitymaster requests your view! Post a comment on "ACC: Aggressive initiatives". Click here!


    More Views on News

    ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments (Quarterly Results Update - Detailed)

    Jul 20, 2017

    Expanded capacity helped ACC strengthen its market presence in eastern region during the quarter ended June 2017.

    ACC: Jan-March Quarter Sales up 9% YoY, Margins Dip (Quarterly Results Update - Detailed)

    May 4, 2017

    Expanded capacity results in topline growth during the quarter ended March 2017.

    ACC: Demonetisation Takes Toll on Volumes (Quarterly Results Update - Detailed)

    Feb 20, 2017

    Demonetisation hits cement demand during the quarter ended December 2016.

    UltraTech: Post-Acquisition Cement Capacity Augmented to 93 MTPA (Quarterly Results Update - Detailed)

    Aug 11, 2017

    UltraTech Cement completed the acquisition of cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL) during the quarter ended June 2017.

    Ambuja Cement: Fall in Other Income Drag Bottomline Lower (Quarterly Results Update - Detailed)

    Aug 11, 2017

    While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 01:51 PM


    • Track your investment in ACC LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Compare Company With Charts