India's UltraTech Cement pledges $1.66 billion for expansion to fight rising competition
BENGALURU (Reuters) - UltraTech Cement said it would spend 128.86 billion rupees ($1.66 billion) to increase its annual capacity as the largest Indian cement maker looks to stave off competition from the sector's newest entrant Adani Group.
The funds will be used to build new facilities and expand plants, which would drive up the annual capacity by 22.6 million tonnes, the company said on Thursday. Commercial production from the facilities is expected start by fiscal 2025.
"This investment is backed by a strong conviction on India's growth potential as well as a deep and nuanced understanding of the market dynamics of the cement industry," Kumar Mangalam Birla, chairman of the Aditya Birla Group, said in a statement.
UltraTech, the flagship company of the group, last month lost a race to acquire Holcim AG's cement businesses in India to Adani Group.
That $10.5 billion purchase made the conglomerate, controlled by Asia's richest man Gautam Adani, the second-largest Indian cement manufacturer with an annual capacity of at least 70 million tonnes.
After the expansion announced on Thursday, UltraTech expects to have a capacity of 159.25 million tonnes per annum - more than double that of the Adani Group.
The Indian government had said in its budget in February that it planned to step up spending in the current fiscal year to build public infrastructure and drive economic growth, which will be a boon for infrastructure companies including cement makers.
($1 = 77.5616 Indian rupees)
(Reporting by Nallur Sethuraman and Chris Thomas in Bengaluru; Editing by Aditya Soni)