UltraTech lines up further capacity expansion of 7.5 MTPA in FY25

UltraTech plans to add 7.5 MTPA further capacity in FY25

UltraTech Cement Ltd plans to commission a further 7.5 MTPA of cement capacity for the rest of the ongoing financial year, after commissioning 8.7 MTPA in capacity for the April-June quarter to take its total cement capacity to nearly 150 MTPA.

Most of April-June capacity was added in southern India, as well as in central markets, through a mix of acquisitions, greenfield, and brownfield expansions.

All of the 7.5-MTPA cement capacity addition for the rest of the year will be in the form of brownfield expansions across markets, including an integrated unit in Madhya Pradesh with a 4.5 MTPA capacity. The Madhya Pradesh plant expansion is scheduled for commissioning in the January-March quarter, according to an investor presentation issued by UltraTech after its April-June financial results.

Like its competitors, India's largest cement maker has put in place plans to expand in southern and eastern India, two highly competitive and fragmented markets. According to its investor presentation, UltraTech's domestic cement capacity will be at 183.5 MTPA by the end of FY27, not including the cement assets of Kesoram Industries, which the company is in the process of acquiring and is awaiting regulatory clearances.

Over FY25 and FY26, the largest greenfield cement project that UltraTech will undertake is a 3.3-MTPA grinding unit in Visakhapatnam, Andhra Pradesh. During a post-earnings call after the Q1FY25 financial results, UltraTech's chief financial officer Atul Daga said that the Visakhapatnam unit is on track to be completed by FY26.

Daga added that despite Jaiprakash Associates' referral to the National Company Law Tribunal for bankruptcy proceedings, the company will continue arbitration over the Dalla Super assets in Uttar Pradesh, in order to acquire them. Jaiprakash Associates, part of the stressed Jaypee Group, owns Dalla Super, earlier known as JP Super.

Rivals Adani Cement, Shree Cement, Dalmia Bharat, among others, have stepped up over the past year to add more capacity in southern and eastern India. Shree Cement announced a major, Rs 7,000-crore expansion last year, which included significant capacity addition in states like Karnataka, and also commissioned a greenfield cement unit in Purulia, West Bengal, last year.

Most major players have also been eyeing up Assam and the north-east as other potential markets for expansion. UltraTech too has lined up a greenfield 1.2 MTPA cement grinding unit in Assam, which is scheduled for commissioning in FY27.

UltraTech reported a consolidated net profit of Rs 1,695 crore in Apr-Jun, flat on-year, and lower than the Rs 2,259 crore for Jan-Mar.

Consolidated net sales for the quarter were reported at Rs 18,069 crore. While it was slightly higher than that of the same period last year, it declined on a sequential basis, from Rs 20,419 crore in Jan-Mar. While revenues were higher than estimates from a Moneycontrol poll, net profit was lower.

Shares of UltraTech closed 3.22 percent lower on the National Stock Exchange at Rs 11,272.50 on July 19.