ACC plans Rs 5,000 cr cement complex


Updated Tue, 03 Jul 2012 00:00:00 GMT

The hope of policy clarifications and increasing demand seem to be bringing the foreign investors back to India. Following Swedish retailer IKEA's Rs 10,500 crore investment announcement for India and Coca-Cola raising its investment by Rs 15,000 crore, Swiss cement maker Holcim-controlled ACC is mulling a Rs 5,000-crore integrated cement complex in Andhra Pradesh.

High interest rates coupled with uncertain global outlook forced Indian companies to shelve Rs 53,119 crore worth investments in the January-March 2012 quarter. This was the third worst quarter after September 2011 when Rs 76,053 crore worth investments were shelved and March 2009 when Rs 70,930 crore worth projects were dropped by India Inc, economic thinktank Centre for Monitoring Indian Economy (CMIE) said.

ACC is planning a 5-million-tonne integrated cement complex, along with an 8-million-tonnes-per-annum cement grinding unit and a 100MW captive power plant at the Gollapalli village, Mandal Mylavaram in Kadapa district in Andhra Pradesh. To support the cement plant, the company is also creating a 7-million-tonnes-per-annum captive limestone mine. "Typically, the cost of setting up a greenfield cement plant is roughly $150 a tonne including captive power plants, mining operations and other related investments," an industry source said.

ACC did not want to speak on the development. "We do not wish to comment on this," an ACC spokesperson said. It is learnt the company is seeking mining lease for 997.08 hectares in the proposed plant area from the central environment ministry.

Industry insiders were surprised that ACC was planning further cement capacity in south India, which is already reeling under excess capacity. "I don't think they are keen on the project for two reasons. There is no logic to expand in the South, where all manufacturers are operating their existing plants only at 75% of the rated capacity. Secondly, why should someone set up a greenfield plant at $150 a tonne when assets are available at $140 a tonne or even less," an industry source said.

ACC has already announced its plans to increase cement capacity by 5 million tonnes through brownfield expansion at its Jamul plant in Chattisgarh with a capex of Rs 3,300 crore to Rs 3,500 crore.

Sources said cement capacities take time to be created. ACC is now getting the project requisite clearances and may take a call sooner than later. "From the date of getting a go-ahead, it would easily take 18 to 24 months to get the plant operational," sources said.