InvestorQ : Why is Aditya embarking on a huge expansion spree in its cement capacity?
diksha shah made post

Why is Aditya embarking on a huge expansion spree in its cement capacity?

12 months ago

I think you are referring to Ultratech Cements, the flagship cement company of the Aditya Birla Group. You are right that Ultratech Cements has approved an investment outlay of Rs.5477 crore to increase its cement capacity by 12.8 MT.

This expansion program will be a mix of Brownfield and Greenfield expansions. Out of this total outlay planned, the company estimates close to Rs.1500 crore to be allocated to its expansion plans in FY21 itself and spent before March 2021.

In terms of geographical bias, the fresh capacity will be focused in the rapidly growing markets in east, central and north India. Interestingly, it is the Eastern region that has seen robust demand on the back of government spending and easy availability of labour post the reverse migration that happened during the pandemic.

Ultratech Cements is already the largest player in India by a huge margin with installed capacity of close to 140 MT. After the expansion, Ultratech will be the third largest cement manufacturer in the world outside of China.

It is estimated that nearly 72% of the proposed expansion is Brownfield and the rest is Greenfield. The company has assured shareholders that this expansion will not impact their deleveraging program, wherein the company is aggressively reducing its net debt.