Mumbai UltraTech Cement Limited, the country’s largest manufacturer of building materials, said that it would spend on 12,866 crore on adding 22.6 million tonnes per annum (MTPA) capacity, just weeks after the Aditya Birla Group flagship lost the race to acquire the Bharat Cement assets of Holcim Ltd to billionaire Gautam Adani.
The acquisition of Ambuja Cements Ltd and its arm ACC Ltd, with a cement manufacturing capacity of around 70 MTPA, is set to make Adani Group the country’s second largest cement maker and a main rival to UltraTech.
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The race for capacity expansion comes as government plans to spend record 7.50 trillion this year for construction of roads and ports to boost growth, increasing demand for building materials such as cement. Besides, revival of capital expenditure by the private sector including construction firms is also expected to boost cement demand.
On Thursday, UltraTech’s board approved plans to increase capacity through a mix of brownfield and greenfield expansion. The additional capacity will be built across the country and will include installation of integrated and grinding units as well as bulk terminals, the company said in a statement.
Kumar Mangalam Birla, Chairman, Aditya Birla Group said on Thursday, “The company has more than doubled its capacity in the last five years and is committed to meeting India’s future needs for housing, roads and other infrastructure.” Is.” Given the size of the investment outlay backed by a strong belief in India’s growth potential as well as a deep and nuanced understanding of the market dynamics of the cement industry, I am confident that this new capacity building will have a multiplier effect, allowing all in India employment and development in the regions.”
The 2024 national elections are also expected to boost cement demand as central and state governments announce new projects and roll out schemes to woo voters.
“With central elections in 2024, we expect demand to grow in a meaningful way with the government’s focus on infrastructure and rural development next year. We will note that in the previous example (FY19), demand grew in the low double digits,” said an April 1 report by brokerage CLSA.
Commercial production from UltraTech’s new capabilities is expected to start in a phased manner by FY25. The company said its current expansion program is also on track and is expected to be completed by the end of FY23.
Upon completion of the latest round of expansion, the company’s capacity will increase to 159.25 MTPA, cementing its position as the world’s third largest cement company outside China. Its current cement capacity is 119.95 MTPA.
Shares of UltraTech Cement rose 0.5% on Thursday 6,007.35 on the BSE, while the benchmark Sensex rose 0.79%.
With the announcement of UltraTech, the Aditya Birla Group plans to invest in all its businesses from aluminum to paint. Last month, Hindalco Industries Ltd, the US arm of the group’s aluminum business, the world’s largest aluminum rolling firm, said it would commit $2.5 billion to build a new recycling and rolling plant in the US in the biggest greenfield expansion plan by the parent group. will invest. Novelis Inc. in Alabama. The facility will have an initial annual capacity of producing 600 kilotons of finished aluminum goods and will be completed by FY26.
The group has doubled its investment in its paint business under Grasim Industries Ltd. Grasim said it would double the investment in its paint business. 10,000 crore by FY25.