Is the Ultratech expansion plan a reaction to Adani buying out ACC and Ambuja?

You can say that. While Ultratech is already in the middle of expanding capacity, the higher capacity expansion planned by Ultratech is largely a reaction to the Adani taking over ACC and Ambuja. Ultratech wants to maintain its dominance in the cement space. Last week, Ultratech announced capex of Rs12,886 crore in a bid to expand its cement capacity substantially over the next 3 years by the end of FY25. It will be a mix of greenfield and brownfield expansion plan by Ultratech Ltd.

This decision comes just a month after Adani won the bid to take over cement capacity of Ambuja and ACC from Holcim of France. That gives Adani access to nearly 70 MTPA of cement, making Adani the second largest cement player in India after Ultratech. Aditya Birla group is quite certain that Adani would not stop at 70 MTPA and would look to scale up his capacity either inorganically or through organic growth. The current ongoing and the future capex will take the cement capacity of Ultratech from 119.50 MTPA to 159.25 MTPA.

Perhaps, the real point that Ultratech wanted to underline with its clear focus on cement capacity is the cost factor. Ultratech is expanding capacity at $76/tonne. That is nearly half of the price paid by Adani for ACC and almost one-fourth the cost paid by Adani for Ambuja Cement. This positions Ultratech in a sweet spot with respect to future profit visibility. Ultratech wanted to underline that it can make cement at a lower cost and maintain profitability despite higher capacity.