Birla Corp to Double Cement Capacity to 30 MT by 2027

Birla Corp, the cement business of the MP Birla group, plans to undertake a massive expansion plan to double its cement manufacturing capacity to 30 million tonnes per annum (MTPA) by the year 2027. Its current cement capacity is 15.6 MTPA. Birla Corp is headed by Harsh Lodha and that had been a major bone of contention between the Birla family and Harsh Lodha after he claimed that MP Birla had bequeathed the business to him.

The expansion will happen in phases. In the first phase, the cement capacity will be enhanced from 15.6 MTPA to 20 MTPA by the end of the year 2021. This will be boosted by the 3.90 MTPA greenfield cement plant at Mukutban near Nagpur going on stream. Originally, the eventual target was only to reach 25 MTPA by 2025. However, that target has been expanded to 30 MTPA by the year 2027 due to higher demand visibility.

Birla Corp currently operates 10 cement plants across India  and some of its recent plant additions have much better efficiency and profitability compared to the legacy plants. For example, the Reliance Cement plant that Birla Corp acquired in the year 2016 is among the most efficient and profitable in India on operating parameters. The idea of this aggressive expansion is to become a more meaningful player in the Indian cement space.

Indian cement companies have seen solid demand and price traction in the last few quarters, which his also evident in the quarterly numbers. However, consolidation and national presence are the key. At 30 MTPA, Birla Corp would still be just one-fourth the size of Ultratech which has a cement capacity of 116 MTPA. Some of the top cement companies in India in terms of manufacturing capacity include Ultratech, Shree Cements, Ambuja/ACC and Dalmia Cements.

Read:- Shree Cements Plans Mega Capacity Expansion

Cement may have perpetual demand but cement companies do well when there is pricing power. Due to a spike in infrastructure spending and a likely turnaround in housing demand, cement demand is likely to take off and prices are expected to be robust. The time is clearly ripe for a massive capacity expansion spree.

Also See:- Sector Update - Cements