After ACC Concrete put on hold its Rs 600-crore ready mix concrete (RMC) expansion plans, it is now the turn of Aditya Birla Group. Grasim, which has been hit by the slowdown in the real estate sector, will not make any further investment in RMC unless demand picks up.

?Grasim has slowed down on its RMC expansion and is not planning any further investment in FY10,? Sanjeev Bafna, president and deputy CFO of Grasim, told FE.

Bafna further said the company has spend about Rs 300 crore in expanding its RMC business so far, of which hardly Rs 100 crore was spent in FY09. Grasim currently has 39 RMC units and UltraTech has about 27 units in operation.

It is observed that the company has been revising its capex to be made in RMC as demand takes a dip.

Grasim, in its Q1 FY09 result presentation, said it had planned a total project cost of Rs 411 crore in Grasim and Rs 149 crore in UltraTech to expand its RMC business. The project cost, however, got revised in Q3 FY09 to Rs 268 crore in Grasim and Rs 104 crore in UltraTech. The investment in RMC ultimately was reduced to just Rs 100 crore in FY09.

Grasim shares on Wednesday slipped 1.55% or Rs 35.55 to close at Rs 2,253.85 on the Bombay Stock Exchange.

DD Rathi, CFO of Grasim, was of the view that there is currently a slowdown in the RMC segment. However, RMC is the future business for the cement industry.

Similarly, ACC Ltd had earlier said, ?The extensive expansion plans have been put on hold for 2009. Focus shall be on consolidating the existing business, whilst continuing to grow volumes from the current base of available 38 batching plants.?

ACC Concrete Ltd, had planned to invest Rs 600 crore to add 200 plants across the country by 2012.

The Rs 4,000-crore Indian RMC market which was making profit until last year and which was expected to grow at 25-30%, is currently taking a huge hit owing to slowdown in the commercial real estate and is forcing the cement players to slowdown their expansion in RMC unless demand revives.

According to experts, although India is the second largest cement producer in the world with 219 million tonne cement capacity, the consumption of RMC by the Indian construction industry is only 3 to 4%, as against over 60 % in developed countries. The RMC penetration is 75% in the US, 50% in Thailand and Malaysia and 15% in China, say experts.