Jhanwar Cements UltraTech’s Dominance

K.C. JHANWAR, managing director, UltraTech Cement, is like a military general, waging war on all fronts. As competition intensifies, India’s largest cement maker is aggressively adding capacity. The target is to reach 200 million tonnes (MT) by March 2027 from 154.86 MT at present and transition to a green cement manufacturer, manufacturer, all together.

UltraTech’s expansion strategy involves organic growth and strategic acquisitions. “This is underscored by holistic cost management, a critical value driver,” says Jhanwar, adding that “acquisitions are not only for capacity augmentation but also for value accretion.”

In FY24, UltraTech commissioned 13.3 MT capacity. It has already added 7.6 MT this fiscal so far. With that, UltraTech has reached 80% of Europe’s total capacity and surpassed cement-making capacity of U.S. It had recently acquired Kesoram Cement (10.75 MT) and India Cements (14.45 MT). “This puts us on a strong growth trajectory,” says Jhanwar.

Key Growth Drivers

Organic and inorganic expansion has been a thrust area over the last couple of years. “The expanded footprint brings down logistics lead distance which, in turn, reduces costs,” says Jhanwar. The acquisitions also add flexibility in product mix and reduce time to service the customer. In FY24, the company reported a 38.33% rise in net profit to ₹7,005 crore, compared to ₹5,064 crore in FY23. Revenue from operations rose 12.12% to ₹70,908 crore. The triggers for the performance include adoption of IT-enabled processes that provide visibility across logistics value chain, improvement in turnaround time of vehicles and reduction in costs. “Long-term fuel contracts with key suppliers and flexible fuel mix help us manage price volatility,” he says. Effective working capital management is another focus area for Jhanwar. “Digitalisation is a key enabler of change management. We are working towards behaviour change so that digitalisation is not seen merely as a means of enabling automation but a way to improve decision-making,” says Jhanwar.

UltraTech is also launching green products to add to its sustainability play. “The focus on increasing the share of green cement products/green energy and circularity of materials not only reduces carbon footprint but also costs,” he says.

Further, streamlining supply chain through IT solutions will optimise end-to-end operations. Real-time visibility of data on key variables enables quicker and effective decision making. These optimise inventory, enabling us to become more cost effective, says Jhanwar.

“We are transforming from being a product supplier to a solutions provider by understanding customers better. Along with cement and application-based concrete solutions for infra projects, we provide contemporary building products to aspirational house builders,” says Jhanwar, adding that the Indian cement sector is expected to keep growing at 5-6% CAGR. “UltraTech has been a leader. Growth will help us maintain leadership. With quality investments done, we are confident of unlocking value in multiple areas of business operations, which will, in turn, drive sustained growth,” he says.

Focus On Future

Jhanwar says India is starting to see a structural shift on account of government focus on new-age infrastructure and significant improvement in revenue streams. The economy is likely to be the third-largest by 2030, he says. Infrastructure sector will continue to play a pivotal role in this journey as demand for housing and commercial spaces is expected to increase dramatically on the back of high GDP growth and increasing aspirations of young Indians. Rising middle class, urbanisation and nuclearisation of families are already pushing demand for housing. “As India’s leading cement and ready-mix concrete company, we are well-placed to leverage the opportunity,” says Jhanwar.

As cement sector is energy intensive, UltraTech is working on reducing its carbon footprint by improving operational efficiencies, using waste materials as source of energy, exploring technologies for becoming fossil fuel-free and adopting renewable energy. “We are committed to net zero by 2050. In FY24, we made significant progress across ESG focus areas. We substituted 22% electricity with green power in FY24 and are targeting use of 85% green energy in operations by 2030,” says Jhanwar. UltraTech has already decided to not invest in thermal power capacity. It is among the earliest cement companies in India to promote Green Logistics. “We introduced CNG vehicles in 2021 and LNG vehicles in 2022. We currently have more than 420 CNG trucks and over 60 LNG trucks in logistics. This year, we piloted use of electric trucks in operations. It helped reduce carbon emissions and costs through improved turnaround time,” he says. Recently, UltraTech secured a $500 million sustainability-linked loan from six banks. This marked its second such financing following the inaugural sustainability-linked bond issue in 2021.

The company is also exploring technologies such as Carbon Capture, Utilisation and Storage in collaboration start-ups. It is working with regulators and policy makers such as NITI Aayog and Department of Science & Technology to lower pollution from its plants.