Aditya Birla cos to invest Rs 77,000 cr to build capacity, enter new areas

Hindalco leads with Rs 54,000 crore investment as demand booms

With metals major Hindalco leading the pack, the Aditya Birla group would be investing a massive Rs 77,000 crore in creating new capacities and entering new sectors such as paints. This would be the group’s largest investment since it acquired Novelis, a US-based aluminium can maker, in 2007.

Hindalco is investing Rs 54,000 crore by 2026-27 led by Novelis, which is investing $2.5 billion in a new aluminium can plant in the US. “This is the largest investment by the group in creating new capacity after its acquisition of Novelis in 2007. The demand for aluminium products from beverage can makers and automobile sector is rising in the US and Novelis’ new plant in the US will cater to this segment even as high energy costs in Europe and semiconductor chip shortages in the automotive business impaired profitability during the March quarter,” said an analyst.

With lower leverage, the priority has shifted to growth from debt reduction and the company said it would invest around Rs 12,300 crore, including Rs 2,300 crore of maintenance capital expenditure, in the ongoing financial year, he said.

Ultratech, India’s largest cement maker, announced investing Rs 13,000 crore to increase its capacity to 160 million tonnes (mt) per annum at a cost of $76 per tonne of cement, far lower than the recent acquisition costs by its rivals. The group’s investment in creating additional capacity in the cement industry was also necessitated by the big bang entry of the Adani family in the sector who acquired Ambuja and ACC for $10.5 billion to become India’s second largest cement player with 70 mtpa capacity.  The Adani group said it would also increase its cement capacity to 160 mtpa – thus taking on Ultratech, which has a capacity of 120 mtpa as of today.
 

“The company has more than doubled its capacity over the past five years and is committed to meeting India’s future needs for housing, roads, and other infrastructure,” said Kumar Mangalam Birla, chairman of the Aditya Birla Group.

Upon completion of the latest round of expansion, the company’s capacity will grow to 159.25 mtpa, thus reinforcing its position as the third largest cement company in the world, outside of China, the company officials said.

Both Adani and Ultratech are scouting for acquisitions in the cement sector and several smaller, regional players are in their radar, say bankers. “Apart from both Adani and Birla raising capacity via expanding existing capacity, both are on the lookout for regional players for acquisitions,” said a banker.

The group's holding firm, Grasim, has also accelerated its investment in the paints business where it would take on the existing market leaders Asian Paints and Berger Paints. The civil construction has already commenced at Panipat and Ludhiana sites to cater to the North India market and the work at Chamarajanagar in South India will begin soon.

The remaining three plants are at different stages of government- approval processes. The group officials said they have accelerated the execution of paint’s capacity of 1,332 MLPA with commissioning of plants to start by early 2024.