ACC betting big on fly ash brick segment
ACC, a cement manufacturer, is investing heavily on the fly ash bricks segment under its “Green Building Centres (GBC)” model. The company, aiming for one GBC per district, plans to open around 650 such centres by 2025 across India.
The company is operating GBC through a franchise based model tying-up with entrepreneurs across the country. Till date, the company has 24 running centres with 23 expected to be added by the end of 2017.
Initial investment in a GBC where the land is bought is around Rs 2-2.5 crore. ACC however is now looking towards entrepreneurs who already own lands so as to reduce the initial capex. Upcoming GBCs in Chandrapur and Azamgarh are based on this model.
According to Danish Rashid, Head-Green Building Center (Business), “it takes around one to one and half year for a GBC to become self sustaining”. The Karnal centre, for instance, was opened in May 2015 and became profitable in January 2017.
ACC revenue will come from the 2% royalty fees it will charge on the net sales from each GBC. “However, in order to promote the model as of now we have not charged any royalty fees from any GBC but will start to do so soon,” says Rashid
With central government and authorities pushing to limit the use of Red Bricks as much as possible, the cement major thinks they have found the right solution.
“Red Bricks heavily impact fertility of the soil. It takes around 200 years for a land, used for making Red Bricks, to become fertile again. Add to this the ever increasing cost of coal. I agree that even today around 99% of construction uses Red Bricks, but fly ash brick is the only way forward,” says Rashid.
While the fly ash brick is changing the construction norms, it is still in an initial stage of usage. “It is very difficult to make home buyers and especially the local contractors and masons understand the benefits of fly ash bricks,” says Pawas Dhawan, owner of Karnal GBC.
Another reason is that the cost of fly ash bricks is around 10% higher than normal bricks.
“We have carried out around 58 workshops at such centres in first half of 2017 in order to educate contractors, masons and buyers. While the cost of fly ash bricks is high, if you look at the total cost, it will eventually be lower,” adds Rashid.
The company claims that use of fly ash bricks can help buyers save around 32% on plaster and around 25-26% on mortar.