UltraTech Cement commits ₹12,886 cr to capacity expansion

UltraTech Cement has committed an investment of ₹12,886 crore for capacity expansion by fiscal 2025. The current capacity expansion programme of the Indian cement major is already on track and is estimated to be completed by the end of the current financial year.

“The board of directors at its meeting held today, approved capex of ₹12,886 crore towards increasing capacity by 22.6 metric tonnes per annum (MTPA) with a mix of brown field and green field expansion,” the flagship company of Aditya Birla Group told the exchanges on Thursday.

This new capacity expansion plan would be achieved by setting-up integrated and grinding units as well as bulk terminals. Ultratech says it will create additional capacity across the country.

Commercial production from these new capacities is expected to go on stream in a phased manner by FY25, says UltraTech, adding that the current expansion program is on track and estimated to be completed by the end of FY23. Upon completion of the latest round of expansion, the company's capacity will grow to 159.25 MTPA.

The recently approved capex plan will be financed by a mix of debt and internal accruals.

"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,” says Kumar Mangalam Birla, chairman of Aditya Birla Group, on the capacity expansion plans.

“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,” he further adds.

UltraTech, which is the third largest cement manufacturer outside China, has an existing consolidated capacity of 119.95 MTPA of grey cement. The company has utilised 77% of this existing capacity, according to the details shared by the company.

UltraTech currently operates 22 integrated manufacturing units, 27 grinding units, one clinkerisation unit, and eight bulk packaging terminals. The new capacity will help the company cater to future growth prospects, says UltraTech.

Companies related to infrastructure building, like UltraTech, have been optimistic about the coming days after the central government announced its massive capex allotment in the Budget earlier this year.

Back in April, Cement Middle East Investments Ltd (UCMEIL), a wholly-owned subsidiary of UltraTech Cement based in UAE, had invested in 29.39% equity share capital of Ras Al Khaimah for White Cement and Construction Materials PSC (RAKWCT), a company listed on the Abu Dhabi and Kuwait stock exchanges. The current stake buy amounts to a $101.10 million investment in RAKWCT.

After this investment, together with the existing shareholding, UCMEIL's stake in RAKWCT will rise to 29.79%. UAE-based RAKWCT has posted revenue worth ₹482.5 crore in CY21, ₹446.4 crore in CY20, and ₹453.3 crore in CY19.