UltraTech to invest Rs 5,477 crore towards 12.8 mtpa capacity expansion

MUMBAI: Aditya Birla Group’s cement flagship company, UltraTech on Thursday has announced Rs. 5,477 crore of investment on a mix of greenfield and brownfield capacity expansion of 12.8 million tonne per annum.

This comes as the first major investment of this size by a cement maker in recent years.

“This significant investment in a core infrastructure sector will accelerate the wheels of economic activity and aid the kickstart of the private investment cycle,” said Aditya Birla Group’s chairman Kumar Mangalam Birla in a media statement.

Given its pan-India presence which will be further strengthened by the capacity expansion, UltraTech will be well positioned to support the rising demand for cement in the country, Birla added.

This expansion includes the existing approval for the cement plant at Pali in Rajasthan, in addition to the company’s 6.7 mtpa capacity expansion currently underway in Uttar Pradesh, Odisha, Bihar and West Bengal, which has picked up pace and is expected to get commissioned by FY22, in a phased manner.

The commercial production from the new capacities is expected to go on stream in a phased manner, by Q4FY23.

“This capacity addition will not impact the ongoing deleveraging program which is on track to make UltraTech debt free by the time the expansion program is completed,” the company statement said.

Upon completion of the latest round of expansion, the Company’s capacity will grow to 136.25 mtpa, reinforcing its position as the third largest cement company in the world, outside of China.

Several cement companies had shelved their expansion plans due to a sluggish demand growth in FY20, followed by an economic slowdown during the first half of FY 21 due to the viral pandemic-led lockdown. However, analysts and industry sources point that the healthy operating margins reported by companies in Q2 of FY21 have allayed fears of cash flow impairment and companies have resumed greenfield and expansion projects that were kept on hold.

“The cement industry has been witnessing healthy volumes post relaxation of lockdown, on the back of the Government’s thrust on infrastructure, underlying demand from the rural economy and individual home builders,” Birla said.