UltraTech Cement is set to reduce its costs by Rs 300 per tonne in the next three quarters. This is due to expanding its plant network, reducing transportation distances, and other efficiency measures. In a post-earnings call on July 19, UltraTech Cement’s management discussed their strategies to cut costs. They reported that the average transportation distance for their cement has decreased from 400 kilometers to 385 kilometers, saving about Rs 45 per tonne.
This is important because logistics costs are a major expense in cement production, said CFO Atul Daga. The management expects to lower transportation distances even more as they increase their plant locations from 59 to over 70. This expansion will bring more cost savings and better efficiency.
UltraTech Cement is also growing its presence both in India and internationally. They acquired a 54 percent stake in Black White Cement in the UAE, strengthening their position in the white cement and putty markets. They continue to lead in grey cement in the UAE as well.
In India, UltraTech is boosting its Waste Heat Recovery Systems (WHRS) capacity, adding 23 megawatts this quarter for a total of 301 megawatts. This focus on WHRS and renewable energy is part of their strategy to lower power costs and improve sustainability.
Looking ahead, UltraTech Cement’s management is optimistic. Despite the usual monsoon-related slowdown in Q2, they expect strong demand in rural markets and believe construction activity will increase in Q3. With ongoing investments in infrastructure and operational efficiencies, UltraTech is well-positioned for growth in the coming quarters.
Recently, UltraTech Cement incurred several one-time expenses due to acquisitions. They bought a 1.1 million tonne per annum (mtpa) cement grinding unit in Maharashtra from India Cements for Rs 315 crore and the 10.75 mtpa cement business of Kesoram Industries. Atul Daga mentioned that they have received approvals for the Kesoram transaction. He added that these are one-time efforts, and expenses should normalize in the future.
