Against flat growth in UltraTech’s sales, Holcim group companies post 8% growth.
Swiss cement major Holcim has strengthened its position in India, thanks to a robust comeback from ACC. The company, one of the world’s top two cement makers, has continued to beat domestic cement giant UltraTech Cement this year. Rather, the gap in their sales growth has further stretched this year.
During the first half (April-September) of the current financial year, the Aditya Birla group’s UltraTech registered flat growth, both in sales and production. In comparison, the Holcim group’s companies in India have put a far better show with sales growth of over 8.2 per cent and production at 7.8 per cent. Overall, the industry’s growth stood at three per cent during the period.
Holcim is present in the country through ACC and Ambuja Cements with a production capacity of 54 million tonne (mt). After Grasim’s cement assets demerger and acquisition of ETA Cement, UltraTech controls a little less capacity at 52 mt.
Holcim and the Aditya Birla group, put together, control nearly 40 per cent of the domestic cement market. Both have established brands and enjoy a premium over other players’ products. Jaiprakash Associates, India Cements, Shree Cement and Madras Cement are the other big players in an overcrowded industry with over 50 players.
In the previous financial year (2010-11), when industry hit a decade low growth of below 5 per cent, UltraTech had reported a growth of 3.2 per cent. However, during the period too, Holcim had outperformed its peer with a sales growth of 4.54 per cent.
At a time when the country’s 300-million-tonne cement industry has started showing a slight upside movement in terms of demand, after over two years of poor performance, the rise in Holcim’s cement sales could augur well for the company, say analysts.
ACC, which had been dampening the overall growth of Holcim in India over the last few years, emerged as the major contributor in the Swiss major’s India growth story in the first half. The company, which has a standalone capacity of a little over 30 mt, alone put up robust growth of over 15 per cent during the period.
“Holcim’s remarkable rise compared with its peer groups or even industry is primarily on the back of stabilisation of ACC’s increased capacity. It was due to the company’s capacity constraints that Holcim suffered in the previous years,” explained a research head at a Mumbai-based brokerage.
The top cement makers in the country managed to keep the shareholders’ wealth intact at a time when benchmark indices plunged over 15 per cent. On the Bombay Stock Exchange, shares of ACC closed weak at Rs 1,109.55, down 0.85 per cent. Stocks of UltraTech slipped 0.4 per cent to Rs 1,120.95. On the other hand, shares of Ambuja gained 2.21 per cent to close at Rs 152.45.
