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Queryist: Sudeep Saldanha, MargaoACC, which was formed in 1936, has come a long way and is today the single largest producer of cement. It ...

Queryist: Sudeep Saldanha, Margao

ACC, which was formed in 1936, has come a long way and is today the single largest producer of cement. It has an installed capacity of more than 10 million tonnes, and has plants all over the country. ACC has created a dominant market position for itself in its segment on the basis of its vast network and its highly modernised plant.

However, with its operational base being mainly in northern and central India, it is facing problems due to these areas becoming surplus zones and the demand for cement growing in Southern India. These constraints are amply reflected in the company’s financial highlights. During the financial year 1995-96, the company recorded sales and net profits of Rs 2342.99 crore and Rs 192.06 crore generating an EPS of Rs 140.2 on an equity base of Rs 137.01 crore.

However, during the six months period that ended in September 1996, its sales and net profits stood at Rs 1221.46 crore and Rs 55.05 crore respectively resulting in a decline in the EPS to Rs. 80.4 (annualised).RATIONALE: The company proposes to invest Rs 2,000 crore out of which Rs 1,760 crore has been earmarked for cement and cement related areas, besides improving the infrastructural bottlenecks of transportation and power. However, with the cement industry’s focus shifting southwards, ACC’s short term prospects do not seem exceptionally bright as its expansion plan will take some time to materialise and translate into gains. However, keeping in mind its satisfactory track record, pedigree and stature in its segment, one could conclude that the prospects of the company are bound to improve.