UltraTech announces ₹32,400 crore capex for expansion in the next three years

New Delhi: UltraTech Cement, an Aditya Birla Group company, announced it has earmarked ₹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 filing. It said the two projects, in Chhattisgarh and Tamil Nadu, will take its total capacity to 151.6 MTPA.

Over the past 12 months the cement manufacturer has expanded its capacity by 18.7 MTPA. Further expansions totalling 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 grey-cement capacity to 198.2 MTPA.

Kumar Mangalam Birla, chairman of Aditya Birla Group, said, “This milestone underscores our pledge to continue laying the foundation for a resilient and prosperous India, ensuring our growth strides 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 service India’s growing demand for cement across the country,” Birla added.

The cement industry is on course 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.

“As much as 70-75 million tonnes of the capacity addition is expected to be commissioned next fiscal year, with 50-55% concentrated in the eastern and central regions," the Crisil report added. Large players will account for 50-55% of the planned capacity addition and incremental supply, and heightened competition will limit growth in prices to 0-1, it added.

However, the intense pace at which capacity is being added will likely prevent margins from improving to the extent that they did in FY21, when lower energy prices boosted profits even though the pandemic weighed on demand.

According to UltraTech, it has grown 11-fold over the past two decades, far outpacing the industry’s four-fold growth.

“It has been our constant endeavour to drive sustainable growth by delivering superior value to all stakeholders. India’s strong growth trajectory provides the cement sector significant headroom for long-term growth. As India’s leading cement and ready-mix-concrete company, UltraTech is well placed to support the country in its exciting growth journey ahead,” said KC Jhanwar, managing director, UltraTech Cement.