ACC Limited: history, ownership, mission, how it works & makes money

A Brief History of ACC Limited

ACC Limited, originally known as The Associated Cement Companies Limited, is one of India's leading cement manufacturers. Established in 1936, ACC pioneered the cement industry in India and played a pivotal role in the country's infrastructure development.

Over the decades, ACC has undergone significant transformations, expanding its production capacity and product offerings. In 1965, it became the first cement company in India to obtain the ISO 9001 certification, setting quality benchmarks in the industry.

ACC's operational footprint spans across several states in India, with a comprehensive network of 17 cement plants, and over 90 ready-mix concrete plants. As of 2023, the company's total installed capacity stands at approximately 37 million tonnes per annum.

In 2006, ACC became part of the Holcim Group, a global leader in cement production, which further enhanced its operational capabilities and market outreach. As of 2023, ACC operates a network of more than 7,000 dealers and retailers across India, driving its extensive distribution strategy.

In terms of financial performance, ACC has consistently reported strong revenues. The financial year ending December 2022 saw ACC achieving a revenue of approximately 17,500 crores, marking a notable increase compared to previous years.

ACC has also invested significantly in sustainable practices. It has developed eco-friendly products and has made substantial investments in renewable energy sources, targeting a reduction in its carbon footprint by 30% by 2030.

The company’s commitment to research and innovation is evident through its numerous product launches, including high-strength and durability-enhanced cement products. Over the years, ACC has introduced several brands, including ACC F2R and ACC Gold, catering to a diverse range of construction requirements.

ACC also focuses on community development and corporate social responsibility. The company has various initiatives aimed at education, healthcare, and skill development in the communities surrounding its operations.

A Who Owns ACC Limited

ACC Limited, a leading player in the Indian cement industry, has a diverse ownership structure involving various institutional and retail shareholders. As of the latest available data, here is an overview of the company's ownership distribution:

The major promoter of ACC Limited is the Holcim Group, which holds a significant stake in the company. Holcim, a global leader in building materials, has been integral in shaping ACC's strategic direction.

As per the latest financial report for Q2 FY2023, ACC Limited reported revenues amounting to ₹4,200 crores, with a year-on-year growth of 7.5%. The Net Profit for the same quarter was recorded at ₹450 crores, which reflects an increase of 12.3% compared to the previous year.

In terms of stock performance, ACC Limited (NSE: ACC) has shown noteworthy resilience. The stock closed at ₹2,500 on the last trading day in October 2023, reflecting a 15% increase year-to-date. The company's market capitalization stands at approximately ₹39,000 crores.

Additionally, the shareholding pattern as reported in the latest quarterly filing highlights the continuing interest from institutional investors, which is crucial for maintaining liquidity and stability in stock performance:

ACC's strategic initiatives and adherence to sustainability have attracted considerable investment interest, particularly in an era where environmental considerations are becoming increasingly influential in investment decisions.

Recent developments indicate that ACC Limited has been focusing on expanding its production capacity. The company announced an investment of ₹600 crores aimed at enhancing its cement production capabilities, which is projected to increase output by 10% over the next two years.

As part of its environmental commitment, ACC has pledged to reduce its carbon footprint by 20% by 2025, aligning with global sustainability standards. This initiative is expected to further enhance its appeal among socially responsible investors.

ACC Limited Mission Statement

ACC Limited, a member of the LafargeHolcim Group and one of India's leading cement manufacturers, has a mission statement that emphasizes sustainable growth, high-quality products, and exceptional customer service. The company aims to provide innovative and sustainable building solutions while maintaining a focus on stakeholder satisfaction.

The mission statement reflects ACC's commitment to excellence in manufacturing, the development of its employees, and the betterment of the communities in which it operates. In FY 2022, ACC reported a total revenue of ₹16,694 crore, showcasing its robust market presence.

ACC Limited’s core values are rooted in:

• Quality: Ensuring that all products meet international standards.
• Innovation: Continuously improving processes and products.
• Sustainability: Committed to reducing environmental impact.
• Customer Centricity: Focusing on fulfilling customer needs effectively.

As part of its sustainability efforts, ACC has set ambitious targets. The company aims for a reduction of carbon emissions by 33% per ton of cement produced by 2030, compared to 2019 levels. This aligns with global efforts to combat climate change.

In 2022, ACC's production capacity was at 35 million tons per annum, with significant investments being made in newer technologies to boost efficiency and reduce waste. The company has also integrated renewable energy sources, with a target of sourcing 40% of its energy from renewable sources by 2030.

ACC's commitment to social responsibility is demonstrated through its various initiatives, including education and skill development programs that reached over 100,000 individuals in 2022. They also engage in water conservation projects that have positively impacted several communities, contributing to sustainable development.

To summarize, ACC Limited's mission statement embodies a comprehensive approach that prioritizes quality, sustainability, and customer satisfaction while driving financial performance. The alignment of their objectives with their operational capabilities underlines their strategy for long-term growth and competitive advantage in the cement industry.

How ACC Limited Works

ACC Limited, one of India's largest cement producers, operates primarily in the manufacture and sale of cement and ready-mixed concrete. The company has been a key player in the construction and infrastructure development sectors, with a strong focus on sustainability and innovation.

In the fiscal year ending December 2022, ACC Limited reported a revenue of approximately ₹17,170 crore, demonstrating an increase from the previous fiscal year. The EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the same period was around ₹3,205 crore, reflecting a margin of approximately 18.65%.

ACC operates a diverse range of manufacturing facilities, including 17 cement plants and over 80 ready-mixed concrete plants across India. Their production capacity stands at about 36 million tons of cement per year. The company has also invested in green technologies, aiming for a significant reduction in carbon emissions.

The company's product portfolio includes various types of cement such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), and specialized products like Ready Mixed Concrete (RMC). In 2022, approximately 32% of their total sales came from RMC, showcasing a growing trend in this segment.

ACC's commitment to sustainability is evident in its investments in renewable energy and waste management. The company has set a target to achieve 50% of its energy needs from renewable sources by 2030. In 2022 alone, ACC generated over 4.5 million units of energy from renewable sources.

Operational efficiency is a core aspect of ACC's business model. The company has implemented advanced manufacturing technologies and process innovations to reduce costs. In the latest fiscal year, the cost per ton of cement produced was around ₹4,600.

Market dynamics also play a crucial role in ACC's operations. The demand for cement in India is expected to grow by 5-7% annually, driven by ongoing infrastructure projects and housing development. The government’s focus on initiatives like “Housing for All” and the National Infrastructure Pipeline is likely to sustain demand for cement in the coming years.

As of October 2023, ACC Limited’s share price was approximately ₹2,377, with a market capitalization nearing ₹42,000 crore. The company's Price-to-Earnings (P/E) ratio stands at around 30.5, illustrating investor confidence in its growth potential amidst a competitive landscape.

Additionally, ACC has a robust dividend policy, paying out a dividend of ₹22 per share in 2022, resulting in a dividend yield of approximately 0.92%.

How ACC Limited Makes Money

ACC Limited, one of India's leading cement manufacturers, derives its revenue primarily from the production and sale of cement and ready-mix concrete. In the fiscal year 2022, ACC reported a consolidated revenue of ₹16,204 crore, reflecting a growth trajectory bolstered by robust construction activities across the residential, commercial, and infrastructure sectors.

• Revenue from Cement Sales: ₹14,947 crore (approximately 92.2% of total revenue)
• Revenue from Ready-Mix Concrete: ₹1,079 crore (approximately 6.6% of total revenue)
• Revenue from Other Income: ₹178 crore (approximately 1.1% of total revenue)

ACC operates through multiple geographical locations, leveraging a vast distribution network and strategically located manufacturing facilities. The company's production capacity as of 2023 stands at 35 million tonnes per annum, making it a significant player in the cement market.

In terms of market strategy, ACC focuses on enhancing its operational efficiencies and expanding its product portfolio, including efforts in sustainability through eco-friendly cement options. The company aims to maintain a competitive edge by investing in technology and innovation, with a capital expenditure of approximately ₹900 crore planned for the fiscal year 2023.

Moreover, ACC has positioned itself to take advantage of the rising demand for housing and infrastructure, driven by government initiatives like housing for all and increasing urbanization. For instance, the recent launch of the PM Gati Shakti initiative is expected to significantly boost infrastructure spending, leading to increased cement consumption.

Furthermore, ACC reported a net profit of ₹2,185 crore for the fiscal year 2022, showcasing a net profit margin of approximately 13.48%, which indicates efficient management of costs amidst fluctuating raw material prices.

• Net Profit: ₹2,185 crore
• Net Profit Margin: 13.48%
• Capital Expenditure (2023): ₹900 crore

The cost structure of ACC is influenced by various factors, including the price of raw materials like limestone, coal, and gypsum. The company engages in strategic sourcing to manage these costs effectively. As of Q2 2023, the average price of cement in India stood at ₹420 per bag, up from ₹385 per bag a year prior, reflecting an increase of approximately 9.09%.

Additionally, ACC's initiatives regarding sustainability and operational efficiency have garnered attention, as the company aims to achieve a carbon-neutral footprint by 2035. This focus not only attracts environmentally conscious consumers but also positions ACC favorably with investors looking for sustainable business practices.

Overall, ACC Limited presents a compelling case for investment with its balanced approach to revenue generation, cost management, and commitment to sustainability, further strengthened by significant market demand and government initiatives aimed at infrastructure development.