Tata group cement maker Associated Cement Companies is planning a substantial expansion of its capacity to make ready-mix concrete. The aim: to improve value added in the group's cement operations.

ACC plans to build eight new ready-mix concrete making facilities at a cost of Rs 30 crore.

These facilities will be located in and around the big cities of Mumbai, New Delhi, Chennai and Hyderabad. RMC capacity will rise from the current 7 lakh tonnes per annum to 1 million tonnes. Simultaneously, in order to retain its lead in the cement business, ACC is going in for a capacity expansion of 3 million tonnes per annum. The cost is estimated at Rs 700 crore. This expansion will take ACC's capacity to 15 million tonnes from the current level of 12 million tpa.

Ready-mix concrete, which is the preferred form of cement in developed countries, accounts for a small fraction of the output of cement companies. One reason for this is that Indian builders have preferred to mix concrete on-site. At one level, this was considered cheaper to do. At another, it allowed many unscrupulous builders to cut corners by using inferior materials.

However, with some reputed business groups entering the construction business, and some established builders preferring RMC, the prospects for the readymade material have improved enormously. Acceleration of certain infrastructure construction such as roads and bridges and fly-overs has also boosted demand for the material.

The advantage with the material is that while it is costlier, it comes with a certain assured and consistent quality. Its use also reduces construction time since one part of the operation is eliminated.

Several other companies have entered the ready-mix concrete business. They include Larsen & Toubro, which has invested Rs 10 crore in a facility in Chennai, and the Aditya Birla group companies Grasim Industries (which is building a 67,500 tonnes per annum unit at Gurgaon, near New Delhi), and Indian Rayon (which is creating a 50,00 tpa facility in Hyderabad). New Delhi-based construction group Unitech is another entrant in this field.

Foreign building materials companies have also entered the fray. The UK's RMC Readymix has formed RMC India, a 50:50 joint venture with the Rajan Raheja group. This company has built three plants to make the product. New Zealand's Fletcher Challenge is in the process of building its second RMC plant at Hyderabad.

The capital costs for RMC plants are not high. But the material has a lower shelf life than cement. Hence the producers have to maintain production levels close to sales.