Holcim, ACC keep shutdowns as an option

Holcim, the Swiss promoter of the country’s two major cement makers, ACC and Ambuja Cements, has said it may shut plants in case of poor demand.

Last December, ACC had shut a unit in Himachal Pradesh for a fortnight, following poor demand and accumulation of inventory.

Paul Hugentobler, a member of the executive committee of Holcim, and deputy chairman of ACC, said, “Surely, there will be similar moves as in Himachal Pradesh but those will be temporary shutdowns.” He was speaking on the sidelines of ACC’s 73rd annual general meeting today. ACC has 14 plants across the country and Ambuja Cements has 10.

Sumit Banerjee, managing director, ACC, had told Business Standard earlier that the company would do further shutdowns if demand did not pick up.

Till last June, the cement industry was confident of good demand. However, in the second half of the year, manufacturers became sceptical with incremental capacities coming onstream and GDP growth rate going down. Annual growth for the industry is expected to go down to 6 per cent.

“The monsoon is soon reaching, so shutdowns for repair and maintenance will be normal,” said Banerjee.

The ready-made concrete (RMX) business of ACC, now spun off into a separate identity, ACC Concrete, is making losses of Rs 100 crore a year. Following this, the RMX business expansion has been put on hold for the current year. When asked whether the expansion plan will be put on track in 2010, Banerjee said, “We will review the situation.”

NS Sekhsaria, ACC’s chairman, said, “Ready-made concrete is mainly in urban areas and the urban sector has been affected (by the slowdown). Moreover, ACC Concrete has added capacities, that’s why the poor performance.” ACC is adding another 8 million tonnes of fresh capacity till 2010 to take its overall capacity to a little over 30 mt.