Weakness

ACC is a brand which enjoys a high level equity in the Indian market. Despite being the
largest cement producer in the country, ACC possesses certain weakness. They are as
follows Cost Structure
The performance of ACC is more sensitive to price than volumes because of its cost
structure. The cost structure of ACC is showing an increasing trend which results in the high
cost of production.
Price Sensitivity
ACC has the highest sensitivity to cement prices and its fragmented capacity results in not
being able to influence the price in any significant manner. Even in Karnataka, despite having
the highest market share ACC cement is priced lower than ultra tech cement.
Capacity Addition Hurts
A nation wide presence has resulted in ACC being one of the worst effected due to
commissioning of new capacities in any region South, East & West. Capacity addition
invariably results in market share adjustments and thereby price war.
Lower Cost the impact is not visible
The decrease in the cost of production does not show much impact in ACCs cost structure.
This is basically due to the high power and fuel cost. The fuel use in ACC plants is basically
coal and hence the cost spend on power and fuel is inevitable. As a result of high cost of
power and fuel, the decease in cost from any source is not visible in the cost structure.
Price Follower
ACC is a price follower despite being the largest cement manufacturer in the country. Its
sensitivity to prices ensures that it can never lower prices to gain market share without
hurting itself more than the competitors.
These are some of the weakness of ACC Limited. The company is highly conscious while
dealing with these weaknesses. The main area of focus of the company is to convert these
weakness into the strength of the company.
Opportunities
ACC is one of the important brands of Indian cement industry. The changes in Indian cement
industry will effect directly or indirectly ACC Limited. The positive changes in Indian
cement industry act as a opportunity for brands like ACC. Some of such opportunities are as
follows Infrastructure Development
The Finance Minister Pranab Mukherjee in his Union Budget 2010 speech gave due
importance to the expansion of excellent quality of physical infrastructure in the form of
roads, airports, ports and railways to maintain economic development. He proposed few

initiatives which are estimated to have a considerable impact on Infrastructure Sector in FY

2010-11.
Housing Sector Boom
Over the next five years, the numbers of households are expected to increase at a CAGR of
2.3 per cent, against a population growth rate of over 1.7 per cent. The growth in urban
households will be higher than rural households, shifting the rural-urban household ratio from
70:30 to 67:33. As the growth in households is higher than the population growth, it will
accelerate the demand for new houses.
Higher demand and greater affordability due to lower interest rates and tax breaks is expected
to trigger an unprecedented housing boom. The housing finance industry has estimated a
latent demand of 33 million houses and forecasts a growth of 50 per cent per annum till
2010. With the housing sector accounting for 50 per cent of the current cement demand, this
boom is expected to propel even higher cement demand.
Road Construction will boost demand
The Government has set the target of constructing 20 km. of national highways on daily basis
and to trigger these changes projects have been undertaken via public private partnerships
(PPPs). The Finance Ministry increases the allotment of road transport to Rs. 19,894 crore
against the previous Rs. 17,520 crore for 2010-11. In an attempt to revise and enlarge the
railway network, the ministry has also allocated Rs. 16,752 crore while presenting the union
budget.
Commercial Structure and Corporate Projects
With most industries like textiles, chemicals and plastics, ferrous and nonferrous metals and
non-metallic and mineral products operating at close to full capacity, large investment in
capacity expansions across sectors is likely to boost cement demand. Strong off take is also
expected from select segments such as commercial complexes and multiplexes in important
centres such as Bangalore, Hyderabad and Ahmedabad.
These are some of the opportunities for Indian cement industries which helps brand like ACC
to invade new areas of development.
Threats
ACC being part of domestic cement industry has to face the threats associated with Indian
cement industries. The following are some of the threats of Indian cement industries Coal Cess
The introduction of cess on coal in the recent budget is proving to be having a multiplier
effect across board in terms of cost rise. Cement companies claims that production cost will
have to rise because of this.
Excise Roll over
The Excise roll over of about 2% in the recent budget will surely increase price of cement per
bag. The excise roll over of about 2% will definitely hit cement companies as it will increase
the cost of production as well as cost of cement per bag.

 Increase in Competition
The international players in cement industries are entering in the domestic cement market of
the country, as a result of which the domestic players like ACC etc. are facing tough
competition and price war situation.
Infrastructure Development
Budgetary allocation for infrastructure has increased but in actual there is no big picture
emerging for the much needed infrastructure development. Hence it will act as a negative
point for the cement industry and its growth.
Hence these are some of the internal strengths and weaknesses and external opportunities and
threats of ACC Limited.