Under K.C. Jhanwar, UltraTech Cement is growing from strength to strength

Ask K.C. Jhanwar what UltraTech Cement has been doing over the past three years and pat comes the reply: “Our philosophy is to work on a long-term vision and plan, which is value-accretive to all stakeholders.” The company’s Managing Director explains that this includes all spheres of the business from operational excellence to new product development, a high focus on green products and brand building. “None of this can be achieved without having high empowerment and agility across the organisation,” says Jhanwar, a chartered accountant by training.

Cement is an intensely competitive business and UltraTech is the largest player—it has an installed capacity of 140 million tonnes per annum (mtpa); the Adani Group, through various entities, is the second largest at around 75 mtpa. “We have been on a significant growth trajectory for several years and expect this growth phase to continue. Our Chairman (Kumar Mangalam Birla) has announced the ambition of achieving a capacity of 200 mtpa and we want to convert that vision into reality,” says the MD of UltraTech Cement, which is a part of the Aditya Birla Group.

To get to a capacity of 200 mtpa, the company will need to focus on key areas like supply chain management and, as Jhanwar puts it, specifically on logistics operations and cost optimisation, and ensure improved response time for consumers. “We are also committed to further build on brand UltraTech and strengthen our equity across all our stakeholders,” says Jhanwar, a veteran of the Aditya Birla Group.

Excluding China, UltraTech today is the third-largest cement company in the world in terms of sales, and Jhanwar is hopeful that the company will move to the second position soon. In the commodity business, apart from just scale and size, building the brand is critical, he points out.

“That can be done by adopting the shift from product sales to becoming a solutions provider in the construction journey, be it for individual home builders or for institutional customers.”

UltraTech has been involved in several big-ticket projects in the country. These include the new Parliament building in New Delhi, the Statue of Unity in Gujarat, and the Mumbai Trans Harbour Link, apart from metro rail projects in many cities. Jhanwar views this as partnering the country in nation building. “We are very optimistic about the cement sector in India since it has direct linkages with the country’s infrastructure requirements. That in turn is aided by fast-paced urbanisation coupled with the increasing aspirations of a younger generation,” he says.

Not surprisingly, there is a big opportunity in India’s ambition to be the third-largest economy globally by 2030. “It will provide opportunities for growth across sectors and there is a lot of headroom in cement. For us, the high focus on the domestic market will continue, apart from exploring strategic growth opportunities in the overseas markets,” says Jhanwar, the winner in the Cement category of the BT-PwC India’s Best CEOs ranking this year.

Taking the M&A route has been a key part of UltraTech’s strategy. Late last year, it announced the acquisition of the cement business of Kesoram Industries through a share-swap agreement—UltraTech will issue one share for every 52 shares of Kesoram—and bring to the fold capacity of 10.75 mtpa across Karnataka and Telangana. There was also the buyout of Burnpur Cement’s cement grinding assets in Jharkhand (with a capacity of 0.54 mtpa), giving UltraTech access to the state’s market.

A report put out by Elara Capital right after these deals said UltraTech’s long-term prospects looked good with these and its previously announced expansion and would enable the company to achieve its target capacity of 200 mtpa. “Further, capacity augmentation would strengthen UltraTech Cement’s place in India, likely making it the biggest beneficiary of demand prospects,” it stated.

The one point that does not miss Jhanwar’s attention is sustainability—he calls it a foundational principle. “It is a key criterion for all our business and operational decisions, and we are fully committed to achieving our net-zero goal by 2050,” he says. It is a point that finds favour with Jigar Shah, Head of Sustainability Research at Maybank Investment Banking Group. “By joining the EP100 and RE100 initiatives, UltraTech has made the right moves when it comes to recycling of water, looking for alternative raw materials and greater use of the sea route. Also, the decision to take the M&A route is a positive since it does not increase emission levels for the company,” he explains. EP100 and RE100 are global corporate initiatives for energy efficiency and renewable energy, respectively.

In the context of cement, emissions are always an important issue and that is where the role of sustainability gets larger. “Limestone emits carbon and during the process of transportation too. The large-scale use of fossil fuels is a reality in the cement business,” points out Shah. “In the case of UltraTech, the focus on waste heat recovery (capturing and transferring the waste heat with a gas or liquid, which is back in the system as a source of extra energy) and moving towards wind and solar are important from a long-term strategy point of view.”

With Jhanwar at the helm, UltraTech Cement seems set on a sustainable growth path.

@krishnagopalan