UltraTech to increase production capacity 10%
UltraTech Cement plans to raise their production capacity by 12.8 million metric tonne (mmt) to 136.25 mmt. The Board has approved an investment of Rs 5,477 crore to enable this expansion, which would be a mix of greenfield and brownfield projects.
The investment amount is far beyond the planned Rs 1,500 crore capex for the FY21. The company justified this by referring to the financial recuperation in the domestic market and the increase in the demand of the cement in general.
The developing markets of the eastern, central and northern regions of the country will be the prime locations for the creation of this additional capacity, the Aditya Birla Group stated in an official release. Amongst all the mentioned regions, the eastern region has generated the highest demand, thanks to increased labour availability as the migrant workers got back from their hometown due to lockdown. A Motilal Oswal report stated that this demand is also upheld by government spending in that region.
Kumar Mangalam Birla, the chairman at the Aditya Birla Group, stated that given the current financial scenery, the capital cost is in line with the government’s Atmanirbhar Bharat scheme, which aims to financially boost the core infrastructure sector and enable the cycle of private investments.
Greenfield projects will make up 28% of the total capacity expansion, while the balance will be made-up of brownfield projects. The new capacities will be phased out, starting from the fourth quarter of FY23.
The plan includes the organisation’s 6.7 mmt capacity expansion that is currently under progress in Odisha, West Bengal, Uttar Pradesh and Bihar. The process has picked up pace since the relaxation of lockdowns. It also includes the approval for the plant at Pali in Rajasthan.
The deleveraging programme that is currently underway to free UltraTech Cement of its long-term liabilities, by the time the expansion is completed, will not be affected by this capacity addition master plan. This plan is set to reinforce their position as the third-largest cement company in the world, outside of China.
Source: Business Standard