Rising prices of plastic packaging bags has emerged as a major headwind, along with higher fuel and freight expenses for cement maker UltraTech, even as the Aditya Birla group flagship firm targets double-digit volume growth in FY27.
Alongside the bag shock, linked to volatility from the conflict in West Asia, UltraTech Cement management in its latest earnings calls, flagged impact from exchange loss also as an additional pressure from the devaluation of the rupee in March.
"... in the last quarter, the immediate impact was because everybody had inventories of fuel, so nobody would have really felt the heat of rising prices of fuel. But bags became a crisis in the month of March and everybody got impacted, the costs went through the roof and our incremental cost on bags was approximately ₹90 crore, which is reflected in other costs for the quarter," said its CFO, Atul Daga.
The West Asia conflict has caused a surge in polymer and plastic raw material costs, with prices rising up to 70 per cent due to supply chain disruptions and soaring crude oil prices.
Replying to a query, Daga clarified that while packaging costs have increased, the availability of bags has not become a supply-side issue.
“Bag availability has not been a crisis. It has become expensive, but it is not a crisis,” he said.
The company believes its scale, diversified sourcing strategy and long-term contracts for fuel will help mitigate the impact.
“Over the last two years, our long-term contracts were unfavourable, but these will now turn favourable for us, and many others do not have such arrangements. So UltraTech will be one step ahead,” he said replying to a query over mitigating measures by the company.
On rising packaging bag costs, Daga said it works with nearly 150 suppliers across the country, giving it stronger negotiating power due to its large procurement volumes.
"When there is a volume advantage for a supplier, obviously, their inclination to service a high-volume customer is much higher," he said.
On diesel prices and freight costs, the management remained cautious, saying the full impact is still uncertain.
“Diesel impact, nobody knows. We are waiting — it might surface its horns next month. We'll have to wait and watch,” Daga added.
The company, which has crossed the milestone of 200 MTPA (million tonnes per annum) capacity, has already taken some price hike in the March quarter.
UltraTech, which aims for 240 MTPA by FY28, will continue to invest in the capacity.
" We see a plan of investing around ₹8,000-10,000 crore every year for the foreseeable future. Future capex pipeline remains fully funded and the growth story is intact," he said, adding "operating cash flows grow because of our existing size, existing capacities, delivering more and more." When asked about UltraTech's volume expectations for FY27, Daga said, "Next financial year. We would target double-digit growth." Over the cement industry outlook, the management said it expects a "sustainable volume growth of 7 to 8 per cent" per annum. The structural drivers as India's urbanisation story, the government's infrastructure commitment, are firmly in place.
"... the PMAY housing targets, rising rural demand, none of these have been diluted by the West Asia crisis. These are very strong structural forces and UltraTech is better positioned than anybody else to capture that demand in the long-term," the management said.
In FY26, UltraTech's total consolidated income was at ₹89,089.04 crore.
Published on May 7, 2026