UltraTech volume to rise to 91 MTPA on JP Associates units buy

Aditya Birla Group-controlled UltraTech Cement said its capacity will increase to 91.1 miilion tones per annum (MTPA) by the current fiscal-end, following aquisition of Jaiprakash Associates' cement plants.
"We expect to complete transaction to acquire Jaiprakash Associates' cement plants within the next 12 months period. Our capacity then will stand augmented to 91.1 MTPA, including overseas operations, from the present 66.3 MTPA," UltraTech Cement Chairman Kumar Mangalam Birla told shareholders at the company's 16th annual general meeting here.
Earlier this month, the company announced acquisition of Jaiprakash Associates' cement plants with a total capacity of 21.1 MTPA at an enterprise value of Rs 16,189 crore.

Birla said the proposed transaction is essentially a geographic market expansion which will lead to UltraTech's entry into the growing domestic market. These include the Satna cluster in Madhya Pradesh (East) and Uttar Pradesh (East), Himachal Pradesh, Uttarakhand and coastal Andhra Pradesh.
The operations will be strengthened by the consequent technological upgradation and enhancement in capacity utilisation on a year-on-year basis.
It will lead to creating synergies in manufacturing, distribution and logistics. As a result, advantages such as economies of scale and creation of efficiencies by reducing lead time to markets will be attained, the noted industrialist said, adding that the company will spend Rs 1,500 crore towards capex plan next year.

On Lafarge, Birla said the company was unable to bid due to Competition Commission of India (CCI) restrictions. "We were restricted by CCI to acquire Lafarge, but there is enough room for geographical expansion."

The company has commissioned cement grinding units at Jhajjar in Haryana, Dankuni in West Bengal and Pataliputra in Bihar. A cement bulk terminal went on stream in Pune last year.
UltraTech has a very strong balance sheet, robust cash flows and gearing levels well within reasonable limits. The company enjoys the confidence of its stakeholders, reflected in its market cap of around USD 14 billion, he added.

The country's cement demand remained passive for most of FY16, particularly on account of low demand from the housing segment.
Birla was optimistic on the cement sector which is expected to grow at around 7 per cent in FY17. He opined that India is moving on to a higher growth tract.
The Government's focus on infrastructure development, housing sector, smart cities, roads etc, along with good monsoon should drive expansion going forward, he added.