Ultratech to spend Rs 11,000 cr in 3 yrs on capacity expansion

The country's largest cement-maker, Ultratech Cement, today said it will spend around Rs 11,000 crore over three years to increase its cement-making capacity by 9.2 million tonnes per annum (mtpa).

"The company has a capital outlay of around Rs 11,000 crore, to be spent over the next three years. These include setting up of additional clinkerisation plants in Chhattisgarh and Karnataka, together with grinding units, bulk packaging terminals and ready-mix concrete plants across the country," the Aditya Birla Group firm said in a statement.

Ultratech said that orders have already been placed for major equipment for setting up the projects.

"These expansions are expected to be operational from early FY14 and will enhance the company's cement capacity by 9.2 mtpa," it said.

Ultratech Cement has 52-mtpa annual capacity. It has 11 integrated plants, one white cement plant, one clinkerisation plant in the UAE and 15 grinding units. It is also the country's largest exporter of cement clinker.

Meanwhile, due to subdued demand growth for cement, the company's net sales stood at Rs 13,210 crore and profit before interest and tax at Rs 2,063 crore in FY11.

"FY11 recorded industry demand growth of 5.3%, the lowest in 10 years. This was primarily on account of the de-growth/subdued growth in various key cement consuming states by lower infrastructure spendings, slowdown in realty sector, an extended monsoon and non-availability of railway wagons," Ultratech said.

Net sales of the company during the final quarter of the last fiscal stood at Rs 4,490 crore and profit before interest and tax at Rs 904 crore.

On the outlook for the industry in the current fiscal, it said, "The cement industry is likely to grow more than 8.5% on the back of government initiatives in rural development, infrastructure and housing."

"The pricing environment may remain challenging and with the impact of surplus capacity, margins continue to remain under pressure," Ultratech added.