Indian Cement major, UltraTech Cement, the flagship company of Aditya Birla Group, has lined up an investment of Rs 12,886 crore towards the capacity expansion of 22.6 million tonnes per annum (mtpa) over the next three years.
According to the company, this will not only reinforce its position as the third-largest cement company in the world, outside China but also further bolster its leadership position in India.
The capital expenditure was approved by the board of directors of UltraTech Cement on Thursday. The development comes barely a month after the Adani Group entered into an agreement with Holcim India's Swiss parent to acquire the India assets (Ambuja Cements & ACC) for an estimated $10.5 billion, which is billionaire Gautam Adani's largest ever M&A.
UltraTech's existing capacity is around 120mtpa. The company had announced a Rs 5,700-crore investment in December 2020 to take this to about 136mtpa. Now, with the new announcement to add 22.6mtpa, UltraTech Cement's total capacity will go to around 159mtpa by FY25. The expansion by Birla will widen the gap between UltraTech Cement and Holcim, whose current combined cement capacity is around 70mtpa.
“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,” Aditya Birla Group chairman Kumar Mangalam Birla said.
The capacity expansion is being carried out through a mix of brownfield and greenfield projects, the company said in a statement. 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. Given that India's per capita cement consumption at 242kg is far less than the global average of 525kg, the potential for growth is significant.