Associated Cement Companies Ltd. (ACC) is seeking approval from its shareholders to issue Rs 1 bn worth of preference shares on a private placement basis. The money being raised is to be used to part finance the Rs 7.5 bn modernization cum expansion program over the next two years.
ACC is India's second largest cement producer with an aggregate capacity of approximately 12 MMTPA.
ACC undertook the current modernization and expansion phase to improve efficiencies and to add capacity.
Steps taken by the company include:
Shift towards use of efficient dry capacity. Company now has 95% of its capacity based on the dry process technology, and only 5% of its capacity is based on the inefficient wet process technology.
Rationalize work force: The company has aggressively implemented a Voluntary Retirement Scheme. In the past five years approximately 3,700 employees have opted for voluntary retirement. The reduction in number of employees has reduced the wage bill of the company substantially. The number of employees in 1994 was 16,000 for a capacity of 8 MMTPA and is currently 12,300 for a capacity of 12 MMTPA.
Set up captive power capacity to reduce the cost of power and also to reduce dependence on outside power, which is expensive and erratic. By FY2000 company plans to meet 80% of its power requirements by internal generation.
Analysts are finally taking a fancy to the stock in view of the rising cement prices and positive results of the modernization program. Most analysts have upgraded the stock to a 'BUY" after a long period of time.
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