Swiss cement giant Holcim seems to have missed a good high-growth opportunity in 2009-10.
India was one of the very few global markets where demand growth for the building material remained in double digits. Holcim, which operates in the country through ACC and Ambuja Cements, could not implement its planned projects on time, missing the bus.
The persistent capacity constraints that ACC and Ambuja faced during 2009-10 did not let Holcim even come close to the industry’s overall volume growth of over 10 per cent. During this period, despatch growth of the domestic cement industry stood at 10.48 per cent, whereas that of ACC and Ambuja, put together, were far behind, at a little over three per cent.
Though Ambuja Cements, on a standalone basis, could manage reasonable growth of close to seven per cent in its volumes, sister company ACC’s poor performance — growth at less than half a per cent — muted the overall Holcim performance. During the year, ACC even reported decline in its despatches as well as production on a monthly basis over three times.
Industry experts point to delay in project planning and commissioning. For instance, ACC’s Bargarh project of 2.14 million tonnes was to commission by 2008-end, but it took a year more. Similarly, Ambuja had to put on hold some of its projects in Bihar and Gujarat.
Sumit Banerjee, managing director of ACC, who is bullish on cement demand in the country, had told Business Standard that ACC failed to participate in the strong growth story primarily due to capacity constraints. N S Sekhsaria, the company chairman, told the recent annual general meeting that 2009 saw shrinking of market share.
With such a poor show, Holcim not only remained behind in volume growth against its rival, the Aditya Birla Group (UltraTech and Grasim) but also the fast emerging cement makers Shree Cement and Jaiprakash Associates, which despatched as much as 50 per cent more.
Analysts say the Holcim group of companies in India need to put their coming projects on fast track. “Otherwise, ACC and Ambuja will continue to remain laggards in the coming years, too, for which growth is likely to remain in double digits,” said a research head tracking the cement sector at a domestic broking house.
At present, the collective capacity of Holcim in India stands at 48 million tonnes (mt) per annum (26 mt of ACC and 22 mt of Ambuja). It has commissioned new capacities recently which will take another four to six months to stabilise and reach optimum capacity utilisation. By the plan, ACC will reach 30 mt and Ambuja will have a capacity of 27 mt by 2010-end.
