Ambuja Cements to add 20 mtpa capacity at Rs 10k cr

Ambuja Cements to add 20 mtpa capacity at Rs 10k cr

Cement major Ambuja Cement's 20 million tonne per annum (mtpa) expansion plan to its already existing 30 mtpa capacity will cost around Rs 10,000 crore, according to analysts.

Ambuja Cement's upcoming plant in Marwar Mundwa in Rajasthan will increase clinker capacity by 3 mtpa and boost cement sales by 5 mtpa, contributing to the long term strategy of capacity expansion. This Rs 2,350 crore investment greenfield integrated unit, will commence operations by the July-September quarter.

The cement manufacturer is evaluating brownfield expansion plans in Maratha (Maharashtra) and Bhatapara (Chhattisgarh) plants. It also plans significant debottlenecking opportunities across all plants. The growth plans will be executed in the mid-term for Ambuja to reach a 50 mtpa cement capacity.

The company has reported a 71% surge in its consolidated net profit at Rs 947.21 crore in the January-March quarter, as against a profit of Rs 554 crore last year, contradicting analyst estimates on the back of strong volume growth and lower operating costs.

According to a report by Goldman Sachs, the company's execution on costs continues to beat expectations, with a combination of fuel-mix change, optimising fixed costs, distribution, and energy efficiency measures contributing to the lower costs. The report said that the expected capacity addition at Marwar Mundwa by Q3 CY21 will not only add 3 mtpa of clinker and 1 mtpa of grinding for the company but also provide clinker for some starved grinding capacity and hence drive better than historical volume growth for the company.

A report by Morgan Stanley said that better-than-expected demand has contributed to faster volume growth. Lower-than-expected costs, helped by Ambuja's ongoing cost-saving initiatives, and higher-than-expected price rise resulted in better EBITDA margins, the report said.

The company plans to complete the expansion in the medium term of around three to five years.

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Also read: Ambuja plans to ramp up capacity to 50 mtpa in the near term

Also read: Ambuja Cement shows good volume growth

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