Ultratech investment plans

Ultratech investment plans
Published: 28 April 2006

India’s largest cement maker Grasim Industries, along with its subsidiary UltraTech Cement, is planning to invest around Rs 6,000 crore to increase the total cement capacity of the company to 40Mt by ’08. Currently, Grasim, along with UltraTech, has a cement capacity of 31Mt.

Grasim Industries alone is investing Rs 2,475 crore to set up a greenfield cement plant at Kotputli in Rajasthan with a split grinding unit of a total capacity of 4m tonne per annum.

Grasim is also expanding its capacity at Shambhupura in Rajasthan and adding a split grinding unit with a total capacity of another 4m tonne.

The cement major is also setting up mini thermal plants for both the manufacturing units.

This apart, Grasim is investing around Rs 1,261 crore over the next two years on modernisation, debottlenecking and setting up of grinding unit at Dadri, in the ready mix concrete (RMC) business and captive power plants in various manufacturing units.

“So far, we have grown by acquiring assets. Now, we are creating assets. These additional investments in cement business will enhance our total capacity to around 40m tonne by ’08-end,” DD Rathi, whole-time director and chief financial officer (CFO), Grasim Industries said.

UltraTech Cement, a Grasim subsidiary has also lined plans for a capital expenditure of Rs 1,520 crore, largely towards setting up of a new power plant, de-bottlenecking and modernisation. Grasim is investing another Rs 627 crore to enhance its capacity in the viscose staple fibre (VSF) business.

The company wants to enhance its VSF capacity to 306,950 tonne per annum from the current level of 257,325 tonne. Cement demand in India grew about 15% in the March quarter in the world’s biggest cement market after China, and companies raised prices by nearly a quarter in response.

Analyst said that up to ’08, about 21.5m tonne of capacity is expected to be added by expansion in the domestic cement industry. The current fiscal’s domestic demand will be 140m tonne. With GDP expected to grow 8%, growth in cement consumption is also expected to remain above 12% per year.

“This means the country needs an additional 50m tonne for the next three years. So, it clearly shows that the proposed expansions will not impact the margins,” an analyst said.