UltraTech to replace ACC as top player in capacity

UltraTech Cement, part of the Aditya Birla group, is poised to overtake ACC this month as the country’s largest cement company in terms of production capacity.

The company, which currently has a production capacity of 21.9 million tonnes, is slated to raise its capacity to 23.1 million tonnes in June. Whereas, ACC’s capacity will be at 22.63 million tonnes. Since 2005, UltraTech has increased its capacity by over 41 per cent, while ACC could raise it only by about 24 per cent. Still, even if ACC’s new capacities become operational in July, both companies would be running neck-and-neck.

In terms of market capitalisation, ACC is far ahead of UltraTech at around Rs 14,700 crore (as on May 29), whereas market capitalisation of the Birla firm is at Rs 9,000 crore.

Even in terms of profitability and net sales, UltraTech is chasing ACC. ACC — with its pan-India presence — clocked net sales of Rs 7,889 crore in the calendar year 2008, up 12 per cent compared with the previous corresponding year. However, UltraTech’s net sales from operations jumped by around 18 per cent to Rs 6,618 crore.

The Birla firm, earlier a part of construction giant Larsen & Toubro, was rechristened as UltraTech in 2004 and has rapidly been adding capacity since then. Initially taking the ‘de-bottlenecking’ route and then going ahead with fresh capacity additions, the company has come a long way from around 15 million tonnes when Grasim acquired a majority control in the cement business of L&T. Meanwhile, UltraTech also amalgamated Narmada Cement Company with effect from October, 2005.

“The company already has attained a capacity of close to 22 million tonnes and the residual capacity at the Andhra Pradesh unit will be commissioned in June, which will result in an overall capacity of over 23 million tonnes, ” said K C Birla, CFO, UltraTech. It will only be in July that ACC will regain its top position when its expansion at Bargarh (Orissa) gets commissioned.

“We in ACC are not in a race to be or to remain number one in volumes and we are not overly sensitive to such transient changes in our ranking by size. Quality of our product and services, and not merely the quantity, is our emphasis,” said DattaGupta, CFO.