India: UltraTech, India's leading cement producer, is planning a 19% increase in capacity to 62Mt/yr by April 2013 from its current output of 52Mt/yr. Company chairman Kumar Mangalam Birla, who made the announcement, added that the outlook for the sector remained challenging.
"I believe the short-term prospects for the industry appear bearish. Regardless, over the medium to long term, the sector offers good growth potential," said Birla in a statement released after the company's annual shareholder meeting. "Undoubtedly, we are facing some tough challenges today."
Rising input and energy costs have limited margins at cement companies, while demand remains a worry amid a weakening economy and high interest rates which have slowed housing and infrastructure development in Asia's third-largest economy. Producers have also come under pressure after the country's anti-trust watchdog fined 11 companies, including UltraTech, saying they colluded to under-use their plants and create an artificial shortage of cement.
UltraTech has been in talks to buy one of two cement plants put up for sale by debt-laden Jaiprakash Associates, in western and southern India. The company reported a 14% increase year-on-year in net profit for the quarter ending in June 2012 to US$129m.
