UltraTech Cement capacity tops 200 mtpa, now the largest outside China

UltraTech Cement has crossed the 200 million tonnes per annum (mtpa) installed capacity mark in India, Chairman Kumar Mangalam Birla announced on Friday. The company is currently the world’s largest cement producer outside China.

“Today, with the commissioning of three plants at Visakhapatnam in Andhra Pradesh, Shahjahanpur in UP and Patratu in Jharkhand, UltraTech’s cement capacity will increase to over 200 million tonnes per annum,” the President said at an event in Mumbai.

Approximately 90 million tons of the total capacity was obtained through purchases. The company’s acquisition-led expansion started with the L&T cement business and expanded with deals covering Jaypee, Binani, Century, Kesoram and most recently India Cements.

“It took us 36 years to reach 100 million tonnes. The next 50 million tonnes was reached in five. After that, the next 50 million tonnes was reached in a little over two,” Birla said in his speech to a meeting of media and company employees. “I said in 2019 that scale is not everything. It is the only thing. This 200 million tonnes milestone has made me think about it once again.”

Expansion plans

UltraTech’s aggressive scaling drive contrasts with rival Ambuja Cements, which is part of the Gautam Adani-led Adani Group. Ambuja stated that it will prioritize profitability and capacity utilization over rapid expansion and may postpone the target of reaching 155 mtpa capacity by FY28. Mint It was previously reported. It currently has a capacity of around 109 mtpa, making it India’s second largest cement producer.

UltraTech currently aims to scale its capacity to 240 mtpa by FY28 with an investment of $28 million. ₹16,000 crore. The expansion took place at a time when the sector was struggling with increasing input and energy costs due to the Iran war.

“Geopolitical disruptions will intensify cost pressures for cement manufacturers in the first half of this financial year. An increase in energy prices will have a significant impact on energy and fuel expenses, and a moderate increase in raw material and freight costs will increase the overall cost by 4-6% this fiscal,” Sehul Bhatt, director of intelligence at Crisil, said in a note dated April 13.

Crisil Intelligence said dual headwinds such as rise in prices excluding goods and services tax and rising premium trend could help realizations, but added that there could be a risk on margins due to higher costs.