New Delhi: UltraTech Cement, an Aditya Birla Group company, has announced that it has set ₹32,400 crore for capital expenditure (capex) over the next three years as part of its expansion plans. The company said it plans to increase its capacity to around 200 million tonnes per annum (MTPA) in the near future.
It also announced the commissioning of two new greenfield projects with a total capacity of 5.4 MTPA in an exchange file. It said the two projects, in Chhattisgarh and Tamil Nadu, will take its total capacity to 151.6 MTPA.
During the past 12 months the cement manufacturer expanded its capacity by 18.7 MTPA. Further expansions totaling 35.5 MTPA are currently underway across 16 locations. UltraTech is also in the process of closing its acquisition of Kesoram Cement, which will increase its gray cement capacity to 198.2 MTPA.
Kumar Mangalam Birla, chairman of Aditya Birla Group, said, “This milestone underscores our promise to continue laying the foundation for a resilient and prosperous India, ensuring our growth steps in tandem with the nation’s development.”
“With a mix of integrated cement plants, grinding units and bulk terminals across 59 locations in India along with 307 ready mix concrete plants, UltraTech’s scale and capacity footprint is unparalleled. And this scale will further enable UltraTech to serve India’s growing demand for cement across the country,” Birla added.
The cement industry is on track to increase capacity by 150-160 MTPA from FY25 to FY28, according to a Crisil Ratings report. In the past five fiscal years it has increased capacity by 119 MTPA to 595 million tonnes.
“Up to 70-75 million tonnes of capacity addition is expected to be commissioned next fiscal year, with 50-55% concentrated in the eastern and central regions,” the Crisil report added. Big players will make up 50-55%. of the planned capacity addition and increased supply, and increased competition will limit price growth to 0-1, it added.
However, the intense pace at which capacity is being added is likely to prevent margins from improving as much as they did in FY21, when lower energy prices boosted profits even as the pandemic weighed on demand.
According to UltraTech, it has grown 11-fold over the past two decades, far outpacing the industry’s fourfold growth.
“It is our constant endeavor to drive sustainable growth by delivering superior value to all stakeholders. India’s strong growth trajectory provides the cement sector with significant headwinds for long-term growth. As India’s leading cement and premix company, UltraTech is well placed to support the country in its exciting growth journey ahead,” said KC Jhanwar, managing director of UltraTech Cement.
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Published: 02 Apr 2024, 21:07 IST