As competition hots up, UltraTech Cement to invest Rs 12,886 cr in capex

This ambitious capacity expansion plan is a significant milestone in the ongoing transformational growth journey of UltraTech, says Kumar Mangalam Birla, chairman, Aditya Birla Group

UltraTech Cement on Thursday said its board had approved an investment of Rs 12,886 crore ($1.66 billion) to increase the cement maker's annual capacity by 22.6 mtpa with a mix of brownfield and greenfield expansion. This would be achieved by setting up integrated and grinding units as well as bulk terminals. The additional capacity will be created across the country.

Kumar Mangalam Birla, chairman, Aditya Birla Group, said: "This ambitious capacity expansion plan is a significant milestone in the ongoing transformational growth journey of UltraTech. The company has more than doubled its capacity over the last five years and is committed to meeting India's future needs for housing, roads, and other infrastructure.

"This investment is backed by a strong conviction on India's growth potential as well as a deep and nuanced understanding of the market dynamics of the cement industry. Given the size of the investment outlay, I am confident that this new capacity creation will have a multiplier effect leading to jobs and growth across multiple regions in India."

Commercial production from these new capacities is expected to go on stream in a phased manner by FY25. UltraTech's current expansion program is on track and estimated to be completed by the end of FY23, it said.

Upon completion of the latest round of expansion, the company's capacity will grow to 159.25 mtpa, reinforcing its position as the third largest cement company in the world, outside of China, it said in a stock exchange filing.

The investment comes at a time when last month Holcim India's swiss parent company had signed a binding agreement with the Adani Group to sell its business in India in a deal estimated to be around $10.5 billion.

Adani Group, owned by billionaire Gautam Adani, currently has no cement-making operations but said the firms were a good fit given its ports and logistics, energy and real estate businesses.

Under the deal, Adani Group will pay $6.4 billion in cash to acquire Switzerland-based Holcim's 63.1% stake in Ambuja Cements Ltd and 54.5% holding in ACC Ltd, Holcim said. The rest of the companies' shares will be bought via an open offer, Adani said in a separate statement.

UltraTech has 22 integrated manufacturing units, 27 grinding units, one clinkerisation unit and 8 bulk packaging terminals. It has a network of over 100,000 channel partners across the country and has a market reach of more than 80%.

Its nearest rival was Holcim India, which had a combined installed production capacity of 70 mtpa.