Real estate boosts Indian cement sector

The ongoing real estate boom backed by soft retail loans and increased infrastructure spending has strengthened the cement sector to new heights and riding on this Associated Cement Companies (ACC) has positioned itself well on the bourses. The scrip is consistently outperforming the benchmark index and within the period of one year has given the return of 70 per cent against the Sensex return of 44 per cent. ACC is mainly engaged in the business of manufacture and marketing of cement, refractory and refractory products, along with manufacture and marketing of ready mix concrete (RMC), which is fast picking up. During the last quarter, revenue from RMC showed a jump of 34 per cent while contributing five per cent to total sales. It also provides consultancy and engineering services.

While dispatches in the cement industry are rising at 3-5 per cent, ACC has shown the growth of 7.5 per cent. During April-November 2005, the company registered total cement production of 11.40 million tonnes while dispatches were 11.42Mt. As against this ACC had production of 10.807Mt and dispatches of 10.76Mt during April-November 2004. The company is currently operating at a total capacity of 18.28Mta.

The scheme of amalgamation has also been approved between Bargarh Cement and Damodhar Cement and Slag. While BCL has a plant in Orissa with a capacity of 9.60 lakh tonnes, DCSL is a grinding unit based in West Bengal with grinding capacity of 525,000tpa. The merger will usher in better operating efficiencies, productivity and economies of scale that will help reinforce the company’s presence in Eastern India.