AAC block makers feel heat amid supply glut, low demand
Ahmedabad: Manufacturers of
autoclaved aerated concrete
(AAC) blocks in the state are facing a severe market downturn due to oversupply and low demand. The state, home to more than 60 manufacturing units with 38 in and around Ahmedabad, has a production capacity of 22,000 cubic metres per day against a demand of only 6,000 cubic metres.
This has led to a steep decline in prices, from Rs 4,900 per cubic metre in 2021-22 to Rs 3,000 after Holi this year. The
Gujarat AAC Block Manufacturers' Association
(GAMA) feels there will be consolidation in the market in the near future. Suresh Badgujar, treasurer of the Gujarat AAC Block Manufacturers' Association (GAMA), said, "The real estate is witnessing a liquidity crisis, and due to that, the payment cycle for
AAC block manufacturers
now stretches to six months. Most of the units are facing difficulties."
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Industry insiders said that some units may undergo ownership changes and at least one is likely to miss its loan instalment. The sector, which gained prominence around 2012 and currently holds over 90% market share in high-rise construction, is heading toward consolidation. Uttam Patel, MD of a leading manufacturing company, who will be acquiring his third plant near Bavla, said, "With investments of Rs 35 crore per unit, the industry is shifting towards lower-margin situation."
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