Focused on expansion to become profitable cement manufacturer: ACC – ET Infra

NEW DELHI: Adani group firm ACC Ltd is making remarkable strides in its ambitious endeavour to double capacities and is also focused on margin expansion to become the most profitable cement manufacturer in the country, according to its latest annual report.

ACC Chairman Karan Adani said Adani group is adopting a three-pronged approach to the growth of its cement business, which also invests in branding and marketing strategy to take advantage of the existing legacy of the ACC brand and focus on strengthening the distributor and dealer network.

“The first is to double our plant capacity with an emphasis on green cement. Our significant presence in the green energy business and utilisation of our fly ash, where possible, from our power generation business, aligns well with this approach. The second is to drive much greater operational efficiency to grow margins,” Adani said in its message to shareholders in the annual report 2022-23.

Besides ACC, which was acquired by billionaire Gautam Adani in September 2022 from Swiss major Holcim along with Ambuja Cements in a USD 6.5 billion sale and a subsequent open offers, has embarked on an ambitious digital strategy.

It is “making investments where value, and not just volume, drive the next phase of growth, Adani said, adding, “We expect digitisation to be a significant multiplier to our cement growth strategy.”

As per the latest annual report, ACC has a cement capacity of 36.05 MTPA (million tonnes per annum) and had a revenue of Rs 22,210 crore from operations.

“We are making remarkable strides in our ambitious endeavour to double our capacities. Furthermore, securing reliable raw material linkages for our upcoming units has positioned us advantageously in the market,” ACC CEO Ajay Kapur said.

It has “focused on margin expansion to become the most profitable cement manufacturer in the country. The aim is to realise cost savings of close to Rs 500 per tonne on EBITDA across our operations.”

As per its sales strategy, ACC is prioritising high-growth states with targeted efforts to expand its presence.

“We aim to increase our share in the B2B segment by offering focused solutions. Focusing on premium products allows us to tap into higher-value markets and widen our margins. We plan to appoint new retailers to widen our market coverage,” Kapur said.

Over the past few years, ACC has faced formidable challenges, including intensified competition, a shifting market landscape, and evolving processes. However, it has embarked on bold business transformation initiatives to ensure the long-term sustainability of the business.

About the outlook for the cement sector, ACC said that it is “favourable” on the back of higher growth opportunities in the housing and infrastructure segments.

The government in the Union Budget 2023-24 has allocated USD 11.4 billion for the creation of safe housing (rural and urban), sanitation, and increase road connectivity.

“With a busy construction season ahead with the pre-election spending kicking in, the industry is expected to see a volume growth of 6-8 per cent going forward and is likely to reach 390-400 million tonnes,” ACC said.

For ACC, individual home builders and ground plus three-storey buildings in the retail segment continue to be its largest customer segments, both in terms of volume and profitability.

“Demand from these sectors is expected to accelerate on the back of growing urbanisation and rural empowerment,” it said.

  • Published On Jun 29, 2023 at 08:08 AM IST

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