The company's board approved the venture, aligning with its strategy to become a comprehensive building solutions provider. UltraTech intends to leverage its manufacturing expertise and customer relationships to deliver high-quality wires and cables.
A new plant, expected to be commissioned near Bharuch, Gujarat, by December 2026, will serve the growing demand across residential, commercial, infrastructure, and industrial sectors.
The wires and cables industry has experienced a robust revenue CAGR of around 13% between FY19 and FY24, driven by the shift from the unorganized to the organized market. UltraTech believes this entry will be value accretive to its shareholders.
Kumar Mangalam Birla, Chairman, Aditya Birla Group, stated, "We intend to expand our presence in the construction value chain through our foray in the cables and wires segment, which aligns with our vision of providing comprehensive solutions to our end customers in the construction sector. Obviously, we will continue to focus and grow our core Cement business. This year UltraTech reached a new milestone of crossing 175 mtpa of cement capacity in India and is likely to emerge as the largest cement company globally (by sales volume ex-China). UltraTech remains committed to delivering superior quality building materials and solutions that contribute to the sustainable development of a Viksit Bharat."
UltraTech Cement's share price decline reflects investor apprehension regarding the company's diversification strategy. Concerns center on the potential dilution of focus from its core cement operations, given its established market dominance. Further, its recent expansion into the paints sector has amplified apprehensions regarding capital allocation and the risk of over-diversification. Investors are wary that resources may be inadequately distributed across multiple business segments, potentially compromising the performance of existing profitable ventures.
UltraTech Cement is the cement flagship company of the Aditya Birla Group. UltraTech is the third largest cement producer in the world, outside of China, with a consolidated grey cement capacity of 183.06 MTPA.
On a consolidated basis, net profit of UltraTech Cement declined 17.30% to Rs 1469.51 crore while net sales rose 2.71% to Rs 17193.33 crore in Q3 December 2024 over Q3 December 2023.