Succumbing to the demand slowdown, ACC - the country's largest cement maker - has become the first victim in the domestic cement indsutry to shut one of its plants in Himachal Pradesh for 15 days effective from Tuesday. The decision has come within a month of ACC Concrete (ACC's wholly owned subsidiary) laying off 25 per cent of its employees.
The capacity of the plant at Gagal- II is 4,800 tonnes per day and on an annual basis it is 2.4 million tonnes. The company has another plant as Gagal - I with a capacity of 2 million tonnes per annum. Normally, cement makers shut their units during monsoon season for around 2-3 weeks period for repairing and maintenance purposes.
J Datta Gupta, chief commercial officer, ACC, said, "Poor cement demand in both Himachal Pradesh and Punjab on account of the economic slowdown has resulted in increase of clinker stocks at our Gagal works in the state, necessitating a shutdown of manufacturing operations for balancing the clinker stocks." The latest updates from Cement Manufacturers' Association (CMA) say that in Punjab and Himachal Pradesh, the cement consumption has shown a de-growth of 14 and 10 per cent respectively between April and October.
Moreover, the duty free and counter-vailing duty (CVD) free imports from Pakistan has resulted in the clinker stock at Gagal plant of the company, the company said in a statement. The government could also consider rationalising the cement excise duty structure, as well as providing abatement of at least 40 per cent as is the case with many other commodities, it further added.
A fortnight back, Business Standard had reported that voluntary production cuts by cement makers was on the card. H M Bangur, president of CMA had told that companies which could not sell their produce might go for voluntary cuts in production.
Reacting to today's development, Bangur said, "Cement makers in the North are being forced to do so due to the imported cement from Pakistan.
Moreover, coming up fresh capacity is another factor. We do not need any protection but want a level playing field in the market." Presently, Pakistani cement is available at a subsidy of Rs 60 per bag, he said.
ACC's sister company Ambuja Cements also has a plant in Himachal Pradesh at Darlaghat with a capacity of 1.6 million tonnes per annum. When contacted, considering that Ambuja could follow suit, A L Kapur, managing director, Ambuja Cements, said, "We will not and will never shut down our units."
ACC, part of Swiss cement major Holcim, produced 18.93 million tonnes of cement so far in the calendar year against 18.34 million tonnes last year, up 3.22 per cent. On the other hand, the 206.46 million tonnes cement industry as a whole produced 6.64 per cent more at 115.38 million tonnes so far in FY09 against 108.20 million tonnes produced in the same period last year.
On the Bombay Stock Exchange, the share price of ACC closed on Tuesday at Rs 535.65, up 4.34 per cent.
