Despite ongoing uncertainty over demand and fears of surplus capacity depressing prices, ACC Ltd., India's foremost manufacturer of cement, has decided to invest Rs 1,600 crore in 2009 and another Rs 1,300 crore next year.

The company officials unveiled the investment plans at the 73rd annual general meeting in Mumbai on Wednesday. ACC stated in a communiqué that it will enhance capacity at Bargarh plant to 2.3 million tonnes (mt) with a 30 MW captive power plant, which is expected to complete by mid-2009.

In addition, the company is also setting up two greenfield grinding plants in Karnataka which would go on steam by the end of the year.

The March sales statistics, vis-a-vis the February figures, were upbeat for the leading cement companies including ACC, Ambuja Cement, and Aditya Birla group's UltraTech Cement and Grasim Industries.

Geneva - Holcim, a Swiss cement supply company, said Monday it had opened international arbitration proceedings against Venezuela, after the South American government failed to pay compensation for the nationalization of its branch there last year.

Along with two other foreign-owned cement companies, Holcim's assets were seized by Caracas in the summer, the company said in statement.

In violation of an agreement between the company and Venezuela, the Swiss firm was never compensated and the government cut off all contact by October.

February saw good dispatches by the cement makers, particularly Grasim Industries and Ambuja Cements. While Grasim’s dispatches rose 10% year on year to 29.19 lakh tones, Ambuja saw a growth of 11.27% at 16.49 lakh tonnes. In comparison, ACC’s dispatches grew by a modest 3.5% to 17.5 lakh tonnes.

All the same, the improving dispatches reflect the various stimulus measures taken by the government.

Going by dealers, demand was robust, driven by government projects and higher spending on account of the upcoming elections. Additionally, higher prices and peak season off-take helped dispatches.

The big news doing the rounds is that cement companies has decided to hike the cement prices by Rs 2-4 per bag.

While confirming the development, H.M.Bangur (MD, Shree Cements) said, “There is no price rise due to shortage but it is done as an effort to cover up cost.”

Bangur added that the company has passed on the benefit of excise duty cut on bulk cement to its customers, however prices of cement bags have risen as there was no relief for those products.

At present, the industry capacity utilisation stands at 85% versus 95%.

Karvy Stock Broking Limited has maintained ‘Buy’ rating on Grasim stock to achieve a target of Rs 1450 within 2-3 days.

According to Karvy, day traders can buy the stock between Rs 1350-1360 with a stop loss of Rs 1300.

Shares of the company, on Tuesday (Mar 03), closed at Rs 1362.05 on the Bombay Stock Exchange (BSE). Current EPS & P/E ratio stood at 210.60 and 6.57 respectively. The share price has seen a 52-week high of Rs 2930 and a low of Rs 831 on BSE.