Cementing lead: UltraTech eyes 200 million tonne capacity

MUMBAI: Billionaire Kumar Mangalam Birla plans to increase UltraTech Cement’s capacity to 200 million tonne per annum (mtpa) in a bid to consolidate his market leadership position even as Gautam Adani adds heft to the building materials business through the Sanghi acquisition.

Work has started on the next phase of growth, said Birla, chairman of UltraTech, adding that when completed, it will take the company’s cement production capacity to 160 million tonne. But, “we aren’t content with just that”, he told shareholders at the company’s 23rd annual shareholder meeting here on Friday. “We are now targeting an ambitious goal of achieving a production capacity of 200 million tonne. This will reinforce our position as one of the largest cement companies in the world.”
Adani, who forayed into the building materials segment through the purchase of Ambuja Cements and ACC, is targeting a capacity of 140 million tonne. The scorching pace of capacity expansion is unprecedented in the sector, which mirrors the growth of the country’s infrastructure development. Once the Sanghi acquisition is concluded, it will increase Adani’s cement unit capacity to 73.6 million tonne from 67.5 million tonne.

In FY23, UltraTech recorded net revenue of Rs 63,240 crore and ebitda (earnings before interest, taxes, depreciation, and amortisation) of Rs 11,123 crore. “FY23 marked significant milestones for UltraTech. We achieved the unique distinction of being the first Indian cement company to record over 100 million tonne sales volume in a fiscal year. This achievement is even more remarkable considering that we reached a production capacity of over 100 million tonne just a few years ago,” said Birla.
The company doubled its grey cement production capacity from 66 million tonne in FY16 to 132 million tonne in FY23. An additional 12.4 million tonne was commissioned during FY23 and 5.5 million tonne in FY24, increasing UltraTech’s total cement production capacity to 137.9 million tonne.
“The strength of the company’s operations is amply exemplified by the fact that it has generated positive cash flows even after meeting all ongoing capex, working capital, and dividend payment requirements… it has still been being able to deleverage a bit,” added Birla.