UltraTech to invest in capacity increases

UltraTech to invest in capacity increases
Published: 12 September 2011

India’s UltraTech Cement Ltd plans to invest INR110bn over the next three years to as as part of the company plan to increase capacity from its current 52Mta to 75Mta, Chairman Kumar Mangalam Birla said at the company’s annual general meeting in September.

UltraTech is set to bring on-stream 9.2Mta of cement capacity by 1QFY14. Investment plans involve new clinker plants through brownfield expansion at Chhattisgarh and Karnataka together with additional grinding units. The company also plans to install waste heat recovery systems and installing bulk packaging terminals as well as ready-mix concrete plants.

Speaking of the Indian cement sector’s recent performance, he noted that demand has been weaker than expected given lower infrastructure spending and poor housing demand. In FY11, consumption grew just 5.3 per cent compared with 8-10 per cent over the past decade. Overcapacity also continues to plague the domestic industry with 28Mta of capacity added in in FY11, on top of the 60Mt in FY10. High fuel and energy prices have further compounded the issue consequently squeezing industry margins.

However, in terms of India’s long-term growth potential, Mr Birla expects demand to advance 8.5 per cent a year and the government would continue to invest in developing infrastructure and housing. The government’s 12th Five Year Plan has doubled infrastructure spending to US$1trn.