Cement capacity at India's Ultratech crosses 150mn t/yr

India's biggest cement maker Ultratech has crossed 150mn t/yr in capacity because of recent expansions and is on track to reach nearly 200mn t/yr over the next three years. Higher cement output typically raises consumption of petroleum coke and coal.

Bombay Stock Exchange-listed Ultratech's capacity reached 151.6mn t/yr early this month with the commissioning of two greenfield cement plants of 2.7mn t/yr each. These units are in the southern state of Tamil Nadu and central state of Chhattisgarh.

The latest expansions have raised its domestic capacity to 146.2mn t/yr. The firm also operates 5.4mn t/yr of capacity of in the UAE.

Debottlenecking at four units in India last month led to a combined capacity addition of 2.4mn t/yr.

Ultratech has added 50mn t/yr of capacity in less than five years with an investment of 320bn rupees ($3.84bn), it said, although it took the company 36 years to reach a capacity of 100mn t/yr.

The firm has expanded its capacity by 18.7mn t/yr over the last 12 months. It is also executing expansion projects to add another 35.5mn t/yr across 16 locations and is in the process of acquiring 10.75mn t/yr of capacity from Indian private-sector firm Kesoram Cement. Ultratech will invest Rs324bn over the next three years as it sees a "significant headroom for long-term growth", it said.

India is the world's second-largest cement producer after China but has a low per capita consumption of 240-250 kg/yr compared with a global average of 500-550 kg/yr, according to industry estimates. Most Indian cement producers are investing in expansion projects to address rising demand.

Ultratech sold 27.32mn t of cement over October-December 2023, up by 6pc from a year earlier but slowing from double-digit growth in the four previous consecutive quarters. The firm posted year-on-year sales growth of 16pc in July-September 2023, 19.6pc in April-June, 14pc in January-March and 12pc in October-December 2022.

Ultratech used 44pc of coke in its kiln fuel mix during October-December, up from 39pc in the previous quarter, partly replacing thermal coal as coke remained competitive.

Imported thermal coal accounted for 46pc of the company's fuel mix in the latest quarter, down from 51pc in July-September. Domestic coal and alternative fuels accounted for the remainder. Ultratech used 43pc coke in its fuel mix during October-December 2022.

The company's blended coke and coal fuel costs for October-December eased to $150/t, down by 25pc from a year earlier and by about 7pc on the quarter. The blended fuel cost was at a historic high of $200/t during July-September and October-December 2022, after coke and coal prices hit record highs in early 2022 following the start of the Russia-Ukraine war.

By Ajay Modi