UltraTech Cement’s chairman Kumar Mangalam Birla warns that escalating energy expenses could dampen India’s economic growth outlook in FY27, despite robust demand and ongoing expansion, amid geopolitical risk and inflation pressures.
UltraTech Cement chairman Kumar Mangalam Birla has warned that a sharp increase in energy costs could weigh on India’s growth outlook in the current financial year, even as he expects cement demand to continue expanding at a healthy pace. Speaking at the company’s annual general meeting, Birla said risks to gross domestic product growth have risen in FY27 because of higher energy prices and trade disruption linked to the West Asia conflict. He added, however, that India’s strong foreign exchange reserves and its path towards fiscal consolidation should help cushion the economy.
Birla said India remains on course to be the fastest-growing major economy, with the Reserve Bank of India projecting GDP growth of 6.6 per cent for FY27. He pointed to private consumption, government capital expenditure, new trade access through recent free trade agreements and a stable financial system as the main supports for growth. Industry estimates also suggest the cement market should stay firm, with volumes expected to rise 6 per cent to 7 per cent this year on the back of housing demand and infrastructure spending.
That outlook comes with a cost challenge. Analysts and company commentary point to rising power, fuel and packaging expenses, with one recent market note saying UltraTech faced sequential fuel-cost increases and flagged the risk of further margin pressure if it cannot pass on all of the inflation. Broader industry analysis from S&P Global Commodity Insights indicates that cement makers in India are likely to see operating profitability come under pressure in FY27 as energy costs climb, especially in the first half of the year.
UltraTech is nonetheless pressing ahead with expansion. The company commissioned 8.7 million tonnes of annual grey cement capacity in April, taking its domestic capacity beyond 200 million tonnes, and Birla said it is now the world’s largest cement maker by capacity and sales volumes outside China. Business Standard reported that UltraTech’s domestic grey cement volume rose 13 per cent in the first quarter of FY27, with EBITDA per tonne staying above ₹1,200 for a second straight quarter. The company plans to invest ₹16,000 crore to lift total capacity to more than 240 million tonnes by FY28 and says it is on track to launch its wires and cables business in the third quarter of FY27. It has also agreed to buy a 26 per cent stake in Solaris Horizon Energy to secure captive solar power for plants in Chhattisgarh.
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