Expanded capacity of ACC helps Swiss major post growth of over 8 per cent so far in 2011.
Swiss cement company Holcim is back on a high-growth trajectory after two years.
Present in India through two group entities — ACC and Ambuja Cements, Holcim has reported more than 8 per cent rise in cement sales so far this calendar year, while the domestic industry is struggling to maintain an 8 per cent plus growth rate.
ACC, India’s second-largest cement maker, remained a laggard last calendar year, as its production and sales declined. But Ambuja, a sister concern, did reasonably well. ACC’s consistent poor show affected Holcim’s overall growth in India last year.
But ACC has seen a turnaround so far this year. On a standalone basis, its sales are up 12.67 per cent during January-April, while those of Ambuja’s are up 2.7 per cent. Both companies follow calendar year as their accounting year.
| BRIDGING THE GAP Sales growth of Holcim companies vs industry in 2011 | |||
| Month | ACC | Ambuja | Industry |
| January | 7.32 | 5.14 | 1.70 |
| February | 16.95 | 4.73 | 7.23 |
| March | 12.37 | 6.25 | 5.39 |
| April | 14.52 | -2.62 | NA |
| All figures in % (year-on-year) Source : Cement Manufacturers' Association and companies | |||
According to the latest data, ACC’s sales grew 14.52 per cent in April, as it sold 2.05 million tonnes cement, against 1.79 million tonnes a year earlier. This is the third month in a row that ACC posted a double-digit growth in sales. However, Ambuja’s sales declined 2.6 per cent in April.
Industry analysts attribute the growth to capacity addition, which ACC did last year, taking its capacity to over 30 million tonnes per annum. They said expanded capacity was helping ACC reap benefits. “The poor base of ACC in 2010 is proving beneficial for it in 2011, while the higher base of Ambuja is affecting it,” explained a research head at a domestic brokerage house.
Though the better growth numbers of Holcim are encouraging for the industry, experts say until other top cement makers declare their sales, it would be too early to say that April witnessed high growth. According to dealers, ACC is pushing for volume growth. “We expect that the cement consumption scenario has not improved much. If ACC's sales are so robust, there could be a possibility that the company might be offering more discounts than its peers in its dominant markets to keep its sales high,” said an industry analyst.
Nearly half of ACC’s sales comes from the southern and central markets of the country. And these regions are doing good in terms of cement demand. Ambuja is a dominant player in the north and eastern parts of the country. In the March quarter, ACC and Ambuja had reported a decline of 10-12 per cent in net profit on account of higher input costs.
Last decade, 2010-11 was the worst in terms of growth at less than 5 per cent. It was half of the industry’s expectations of 8-9 per cent growth. In April, there was an average drop of Rs 7 -10 for a 50-kg bag across India, barring some regions which witnessed sharper decline in prices.
On the Bombay Stock Exchange, ACC shares today closed 0.86 per cent down at Rs 1,098.65, while shares of Ambuja lost 1.35 per cent at Rs 153.30.
