Ambuja commits to a second wave of cement expansion while its existing plants run well short of full

Ambuja Cements has committed to its next round of building, with the first wave of its programme almost complete. The company said it would spend about ₹14,500 crore adding roughly 30 million tonnes a year of cement capacity, a sum equal to about a quarter of the fixed assets on its March balance sheet, calculated from the filed figures. It arrives in a year when the plants Ambuja already owns are running well short of full and each tonne it sells is earning markedly less than it did a year ago.

Management presented the programme as the path it had always described, ending at 155 million tonnes of capacity by FY30. The chief executive said that figure had always included debottlenecking work due to finish in that final year. Earlier guidance set a faster pace. In February the company was pointing to the same capacity two years sooner; in May it cut its target for the end of this financial year to 119 million tonnes.

New kilns and grinding mills earn their keep only once they are used. The chief executive put last quarter's utilisation at about 61-62% of capacity, with the acquired Penna and Sanghi plants near half. In May, management had guided to 70-75% for the group this year, and to higher rates at both acquired businesses than they are now running. The company argues that the new wave is mostly brownfield, with equipment already ordered. That is a case about construction, though; the harder question is what the extra tonnes will earn.

That is where the evidence is weakest. EBITDA, profit before interest, tax, depreciation and amortisation, came to 13.8% of sales in the September 2026 quarter, against 19.2% a year earlier, and EBITDA per tonne sold fell by more than a quarter over the same year, calculated from the reported figures. Total cost was ₹4,410 a tonne, which the company said still leaves it on track for its ₹4,250 target for this year. The longer-range goal has slipped too: a year ago the company aimed for ₹3,650 a tonne by March 2028; the chief executive now puts the target for that year at ₹4,000.

The funding plan depends on that cost path. The chief executive called the expansion "a completely self-sustainable CapEx program", with total capital spending, maintenance included, of roughly ₹7,500 crore in each of the next two years. Last financial year, the company's operations produced ₹5,362 crore of cash. To pay for all of that from operations alone, that cash flow would need to rise by about 40%, calculated from those two figures. Management said the balance sheet could carry any interim gap, and the company's borrowings are small.

There are reasons the gap could narrow. Part of last quarter's cost came from what the company called the impact of the geopolitical conflict, and it put its cost excluding that effect noticeably lower. Cement prices also rose in October, the company said. Management said it is relying mainly on cost cuts -- green power, waste-heat recovery, alternative fuels, rail-borne fly ash and lower-cost new plants -- rather than on prices. The quarter before, cost per tonne had come in inside that target. Until cost per tonne gets back there and the existing plants fill up, the expansion is being committed on the strength of a recovery in profit per tonne that the quarterly figures do not yet show.