Increase in construction activity to boost cement demand by 7-8%: UltraTech

Last month, UltraTech announced the acquisition of a majority stake in southeastern India Cements Ltd.

3 minutes of reading Last updated: August 04, 2024 | 1:33 PM IST

Demand for cement is expected to grow by 7-8 per cent in the current financial year, aided by increased construction activity across the country, according to UltraTech Cement’s latest annual report.

To meet the increased demand, the cement industry is set to expand its production capacity by 35-40 million tonnes in the next fiscal year, with 60-65 per cent of this to be concentrated in the eastern and southern regions, the Aditya Birla Group flagship company said on Wednesday.

Moreover, this increase in demand will translate into an increase in the industry’s capacity utilization to 72 percent in fiscal 2025, from around 68 percent in fiscal 2023.

“Demand for cement is forecast to grow by 7-8 per cent during fiscal year 2024-25, driven by increased construction activity across the country, including infrastructure and housing sectors,” UltraTech said.

The focus was on integrated and coordinated planning and implementation of infrastructure projects in line with the principles of Prime Minister Gati Shakti.

Priority has been given to allocating expenditure to key sectors and efficiency in cash management has been enhanced through timely release of resources using the single account system of the nodal agency/state treasury, it added.

“Responding to growing demand from infrastructure and housing sectors, the Indian cement industry is all set to add new capacity. 35-40 million tonnes of capacity is expected to be commissioned in the next fiscal year, with 60-65 per cent of this being concentrated in the eastern and southern regions,” the release said.

Addressing the shareholders of the company, Chairman Kumar Mangalam Birla said that the infrastructure sector in India is poised for “extraordinary growth” and that investments are expected to grow at a compound annual growth rate (CAGR) of 15.3 per cent over the next five years.

Quoting a Morgan Stanley report, Birla said, “This growth is expected to result in a cumulative expenditure of $1.45 trillion.”

“The rapid expansion of our manufacturing capacity, coupled with significant enhancement of our brand equity in the market, positions your company to effectively capitalise on these long-term growth opportunities,” he said, adding that UltraTech’s growth trajectory mirrors India’s growth story.

UltraTech is aggressively expanding its capabilities, with Birla saying that “our growth momentum has accelerated, allowing us to be at the forefront of infrastructure development in India.”

Mentioning UltraTech’s capabilities, Birla said its “scale and reach are unrivaled”, which will further enable it to “serve India’s growing demand for cement across the country”.

Last month, UltraTech announced the acquisition of a majority stake in Southeast India Cements Ltd (ICL) and also the opening of an offer to acquire 26 per cent of the company’s shares worth Rs 3,000 crore.

During fiscal 2024, UltraTech recorded net sales of Rs 69,810 crore and crossed a historic milestone of 150 MTPA (million tonnes per annum).

Birla said that from the first cement unit we started in the early 1980s with a capacity of one MTPA to today being the third largest cement company in the world outside China, UltraTech’s history has been one of rapid growth, ambitious targets and flawless execution.

(Only the headline and image of the report may have been edited by the Business Standard team; the rest of the content is automatically generated from a syndicated feed.)

First published: August 04, 2024 | 1:32 PM IST