UltraTech Cement plans to set up a standalone cement plant in Dhar, Madhya Pradesh to increase its capacity even as it completed the acquisition of cement assets from Jaypee Group.
The Aditya Birla Group company will invest Rs 2,600 crore for the new 3.5 million tonnes per annum plant, which would commence operations by the fourth quarter of year ending March 2019, Chairman Kumar Mangalam Birla said at the company’s 17th annual general meeting on Tuesday.
That will add to UltraTech’s capacity of 96.5 MTPA after the acquisition of assets from Jaiprakash Associates Ltd. and Jaypee Cement Corporation Ltd., making it the fourth largest cement maker in the world, Birla added.
Turning Around Jaiprakash’s Cement Assets
Birla hopes to turn around the Jaypee Group cement plants over the next three to four years. The company is working on reducing energy costs and improving capacity utilisation, he said.
The acquisition, completed in June this year, will make UltraTech the largest cement player in the country, expanding its geographic footprint across states such as Himachal Pradesh, Uttar Pradesh, Uttarakhand, Madhya Pradesh and Andhra Pradesh and adding 21.2 million tonnes to the capacity.
“The acquisition enables the company’s entry into high-growth markets of India where greater reinforcement was needed,” Birla said.
UltraTech plans a capital expenditure of Rs 2,200 crore for the financial year 2017-18, mainly for stalled projects, regulatory requirements, plant infrastructure and routine maintenance.
Birla said the focus on cost optimisation and operational efficiencies helped UltraTech register a 15 percent rise in net profit in the April-June quarter.
The company expects to maintain the earnings momentum despite sluggish demand from the housing sector and lack of private expenditure. “I believe that it is a matter of time before the private sector investments pick up,” Birla said.
The government’s focus on infrastructure development, affordable housing, smart cities and Swachh Bharat Abhiyan will bolster cement demand and curtail oversupply, he said.
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