Birla corp targets value share retention with ₹4,335 cr capex; 27.6 mtpa cement capacity by FY29

Sandip Ghosh MD & CEO, Birla Corporation
| Photo Credit:
DEBASISH BHADURI

Birla Corporation, one of India’s largest cement makers, is looking to retain its “value” share in markets across its strongholds and operating areas by securing “best prices” and higher realisation, even as the company firms up on capex-driven organic growth.

Volumes are expected grow at 6-8 per cent, in line with industry estimates. 

Just last week, the MP Birla Group’s Board approved ₹4,335 crore capital expenditure to scale up production capacity by setting up three new grinding units and expanding an integrated unit.

The proposed greenfield and brownfield projects will increase the production capacity to 27.6 million tonnes (mt) by 2028-29 from 20 mt at present. This expansion would give the company greater access to Bihar, Maharashtra and some of its core markets in North and Central India.

“We consider Eastern Uttar Pradesh and Madhya Pradesh as our core operating areas where we are co-market leaders. We are not as strong in Western Uttar Pradesh. When you look at Eastern Uttar Pradesh, Birla Corp is the co-market leader with big players. We have two brands — Perfect Plus in the premium segment and Samrat in the value segment — which help us straddle across segments,” Sandip Ghose, MD and CEO, Birla Corporation, told businessline. 

In its core markets, the company is operating at near 100 per cent capacity utilisation. “We gained market share in Maharashtra as we ramped up capacity at Mukutban,” said Ghose. 

Capex Plans 

As per the capacity expansion plan, RCCPL, the company’s wholly-owned subsidiary, will set up two greenfield grinding units in Uttar Pradesh with a total capacity of 3.40 million tonnes per annum (mtpa) and one 3.70 mtpa brownfield clinker manufacturing unit at Maihar, Madhya Pradesh.

The capex will be funded by a mix of debt and equity. Analysts peg the company’s debt to be in the range of ₹3,000 crore for FY26. However, Ghose maintains that net debt-to-EBITDA  will remain at “comfortable levels”, with the long term policy cap of 3.0x. 

Net debt for FY25 stood at ₹2,240 crore, down from ₹3,000 crore in FY24. “We do not expect a material change in the debt-equity ratio due to the proposed capacity expansion,” Ghose said. 

So far, the North and East regions have contributed the most to realisation gains, supported by sequential price improvement and better demand traction. While the East saw relatively higher price gains, North India markets recovered from a depressed base in the third quarter last fiscal. In contrast, Central India continued to face headwinds along with muted demand. Pricing in this region remained largely flat, impacting realisations.

Despite pricing pressures in Maharashtra, the Mukutban plant has emerged as a volume growth engine and has reached high utilisation levels of around 80 per cent in FY25, which is expected to touch around 85 per cent in FY26.

Market Share Gains 

Ghose said Birla Corporation will look at retaining its market share — by value rather than be in a volume game — by FY29 as other cement manufacturers would also be adding capacities. 

Their push would be through premium offerings and optimising geo-mix, focussing on higher price realisation and better margins. 

“We would like to retain our co-leadership in core geographies, we are not looking at increasing our shares disproportionately . And I am looking at value share more than volume share. That is what makes a difference in the bottom-line,” the MD explained. 

Pricing Strategy 

Ghose pointed out that linking pricing power to a company’s size is a bit flawed. 

Influence on prices in a particular market depends more on the “Go-To-Market” strengths of the company rather than its absolute size. The location of manufacturing facilities, production efficiencies and — above all — brand, sales and distribution assets determine competitive edge in the market.

“Since we have a large market share in Central Region, which accounts for nearly 50 per cent of our sales, we are able to have an influence over the prices based on the demand scenario. Further, as a strategy, we have focussed on sale in the premium segment, which accounted for nearly 60 per cent of our volumes in Trade segment in Q425,” Ghose added.

Share of premium products sales are up by 600 basis points (6 percentage points) over 54 per cent in FY24. “With high level of capacity utilisation, I don’t have any great anxiety to go and dump material somewhere to increase market share (in terms of volume). I am neither going to disturb the prices. My objective always would be how to get the best price in whichever segment, category and particular market where the company is operating,” he said. 

Analyst firm, Motilal Oswal, in a report said, Birla Corp reported sharp sequential improvement in profitability, led by an increase in realization and controlled opex / tonne. 

“Steady growth at the Mukutban (Maharashtra) plant also helped it to achieve strong performance. The company announced capacity expansion plans to be commissioned over FY28-29. Till then, due to capacity constraints and a peak capacity utilization, we factor in a moderate volume CAGR of 5 per cent over FY25-27,” it said.

Published on May 16, 2025