The improving demand scenario in the cement industry and the government’s push for the housing and infrastructure sectors are expected to help UltraTech Cement clock a 25 per cent growth in turnover at Rs.25,000 crore in the current fiscal.
Addressing shareholders at UltraTech Cement’s 14th Annual General Meeting (AGM) here on Wednesday, Chairman Kumar Mangalam Birla, said, “In 2013-14, the cement industry had to bear the brunt of the overall economic environment. Demand stayed sluggish.’’
Additionally, there had been a surge in logistics and raw material costs, he said.
Mr. Birla said in the cement industry, supply would exceed demand in the next few years with additional capacity, being set up by the industry, coming on stream.
The demand-supply mismatch was expected to stay for some time, and would lead to prices remaining under constant pressure, he said.
According to Mr. Birla, the acquisition of the 4.8-million tonne Gujarat Cement units of Jaypee Cement at a cost of Rs.3,800 crore represented a milestone in UltraTech’s growth strategy, strengthening its foothold in the growing western market and bolstering a coastal footprint.
Additions to capacityWith this acquisition, the company’s capacity is now 62 million tonnes, including three million tonnes overseas.
“By early 2016, we expect this to scale up to 70 million tonnes when all of the ongoing projects will be fully commissioned. A judicious mix of internal accruals and borrowings has been used for funding the projects,’’ he said.
The company had incurred a capital expenditure of Rs.2,300 crore in 2013-14, and has earmarked a capital expenditure of around Rs.7,000 crore towards expansion, brownfield projects and grinding units at various plants going forward.
On the industry’s growth prospects, Mr. Birla said that even as the short-term outlook continued to remain uncertain, “I believe, over the long-term, demand growth should move up to double digits. The growth drivers will be housing and infrastructure.’’
