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UltraTech Cement has identified rising plastic packaging costs, fuel-linked expenses and freight pressures as key operational challenges amid ongoing geopolitical disruptions in West Asia. The company stated that sharp increases in polymer and plastic raw material prices significantly raised cement bag costs during the March quarter, resulting in an additional expenditure of around INR 90 crore. Despite near-term cost pressures and currency-related losses linked to rupee depreciation, the company said it remains on track for double-digit volume growth in FY27 and continues to pursue aggressive capacity expansion plans. UltraTech has also outlined annual capital expenditure investments of INR 8,000–10,000 crore as it targets cement production capacity of 240 MTPA by FY28.
UltraTech Cement has said rising prices of plastic packaging materials, fuel-related costs and freight expenses emerged as major operational challenges during the March quarter, even as the company maintained its expansion plans and projected double-digit volume growth for FY27. Advertisement
During the company’s latest earnings call earlier this week, management highlighted that volatility arising from the ongoing West Asia conflict had sharply increased polymer and plastic raw material costs used in cement packaging bags, placing pressure on operating margins.
Atul Daga stated that while fuel price pressures had not immediately affected the sector due to existing inventories, packaging bag costs rose sharply during March. He indicated that the increase in bag costs alone resulted in an incremental expenditure of approximately INR 90 crore during the quarter, which was reflected under other operational costs.
According to the company, disruptions linked to geopolitical tensions in West Asia led to a surge in polymer and plastic raw material prices, with cost escalation reaching up to 70 per cent in certain categories due to supply chain disruptions and higher crude oil prices.
Daga clarified that although bag prices had risen substantially, availability had not become a supply-side concern. He stated that the issue was related to pricing pressure rather than shortages in packaging material supply.
The company added that its large operational scale, diversified sourcing strategy and long-term fuel procurement contracts were expected to partially offset the impact of rising costs. Management indicated that long-term fuel agreements, which had earlier been less favourable over the previous two years, were now expected to become advantageous relative to competitors without similar arrangements.
On packaging procurement, the company stated that it works with nearly 150 suppliers across India, providing stronger negotiation leverage because of its large procurement volumes and long-standing supplier relationships.
Management also expressed caution regarding future diesel and freight cost pressures, noting that the full impact remained uncertain and could emerge more visibly in the coming months.
UltraTech Cement recently crossed the milestone of 200 million tonnes per annum (MTPA) cement production capacity and has outlined plans to expand capacity further to 240 MTPA by FY28.
The company stated that it intends to continue annual capital expenditure investments of around INR 8,000–10,000 crore over the foreseeable future to support ongoing expansion projects. According to management, the company’s future capital expenditure pipeline remains fully funded through operational cash flows generated by its existing scale and production capacity.
On business outlook, Daga stated that the company is targeting double-digit volume growth in FY27 despite prevailing global uncertainties and cost pressures.
Management further noted that the Indian cement industry continued to benefit from structural demand drivers including urbanisation, government-led infrastructure development, housing demand under the Pradhan Mantri Awas Yojana and improving rural demand trends.
The company stated that these long-term demand drivers remained intact despite geopolitical disruptions and positioned the sector for sustainable annual volume growth of 7–8 per cent over the longer term.
According to the company’s financial disclosures, total consolidated income for FY26 stood at INR 89,089.04 crore.
Source - PTI
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