UltraTech to set 3.5 mn tonne plant in Madhya Pradesh for Rs. 2,600 cr.

Markets leader UltraTech Cement recently announced a Rs. 2,600-crore new integrated cement plant in Madhya Pradesh with a capacity of 3.5 million tonne per annum, which will increase its capacity to 96.5 mt by FY19.

'The board has approved a greenfield integrated cement plant at Dhar in Madhya Pradesh with a capacity of 3.5 mt per annum. The plant will involve an investment of Rs. 2,600 crore and is likely to being commercial production by the fourth quarter of FY19,' UltraTech chairman Kumar Mangalam Birla told the 17th annual general meeting.

This will further enhance UltraTech's presence in Central India, he said, adding the company has also commissioned cement grinding units in Nagpur in Maharashtra and at Patliputra in Bihar during the year gone-by.

The acquisition of the cement business of Jaypee Group (Jaiprakash Associates and Jaypee Cement Corporation) and those in the overseas operations in the UAE will propel UltraTech's capacity to 96.5 mt, he said adding these greenfield expansions will improve this further.

Excluding the JP deal, its capacity now stands at 66.3 million tonne per annum.

'We also have an additional capex plan of about Rs 2,200 crore for the current fiscal, which will mainly be utilised for capacity de-bottlenecking projects, regulatory requirements, plant infrastructure and routine maintenance,' Birla said.

He said after completion of Jaiprakash Associates and Jaypee Cement deals, the focus now will be on to optimise capacity utilisation and generate cash flows.

'The operations will be strengthened by process and technological upgradations, leading to enhanced capacity utilisation. Creating synergies in manufacturing, distribution and logistics offer many advantages. Furthermore, economies of scale and reduced lead-time to markets will be achieved,' Birla said, adding he expects these units to turn around in the next three-four years.

The company has in-principal approval to rise Rs 9,000 crore debt but has no plans to raise equity, offer rights issue or splitting the share value as the company has a very strong balance sheet and robust cash flows, Birla said.

On the business outlook, he said government focus on infrastructure development, affordable housing and smart cities are expected to strengthen cement demand and reduce oversupply.

BS