UltraTech cement has announced a 5477 crore expansion plan that will add 12.8 million tonnes to its annual capacity.- Movement comes later
Aditya Birla Group president and billionaireKumar Mangalam Birla expressed confidence in the cement sector during his only media interaction of 2020. - UltraTech Cement is already the largest cement company in India and the third largest in the world. Its expansion plans will further increase its annual capacity by 10.4% to reach 136.25 million tons per year.
The demand for cement is on the way to recovery as migrants who have returned to their towns and villages of origin settle in for the long term. One of the biggest beneficiaries of this change has been India’s largest cement company and Aditya Birla Group’s flagship UltraTech Cement.
Now, it is doubling this with a new investment of ₹ 5,477 core to increase its annual cement production by 12.8 million tons. That is 10.4% more cement than it currently produces.
The huge investment plan is in tune with the confidence that Aditya Birla Group Chairman Kumar Mangalam Birla showed in a recent interview – his only interaction with the media this year – with Business Insider.
“There was a big question about what would happen to infrastructure spending. If I only see aluminum and cement businesses, they have both returned to pre-COVID levels very quickly. “
Kumar Mangalam Birla at the BI Global Trends Festival 2020 in October
Edelweiss Research noted in a Dec. 2 report that while demand for cement has certainly returned, it is not yet at pre-COVID levels. Meanwhile, Ultratech shares have rallied more than 55% in the last seven months.
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Birla is doubling cement while economic indicators are slow
UltraTech Cement already controls 25% of the industry’s capacity. Once this latest round of expansion is completed, the company’s total capacity will be 136.25 million tons per year, and it will remain the largest cement producer in India and the third largest in the world.
This expansion includes the previously approved cement plant at Pali in Rajasthan with the capacity to produce 6.1 million tons per year. The remainder of the 6.7 million tonnes of annual production capacity comprises additions to plants in Uttar Pradesh, Odisha, Bihar and West Bengal.
Before the financial year ends, analysts expect a 12% drop in profitability even though volumes will expand for the cement sector.
“In terms of plus, we have always been looking for investments that create value. Either greenfield or brownfield or inorganic. We have made more than 40 acquisitions in the last two and a half decades. Most of them have performed very well and served the purpose for which the acquisition was made, ”said Birla.
“So I think it’s about looking for opportunities. First, they must fill a strategic void. And they must create value ”, he added.
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