When the going gets tough, the tough get going. This stands true for O.P. Puranmalka, who retired as Managing Director of UltraTech Cement this March. During his tenure, the cement major went on a buying spree that ensured its growth in tough times. The company increased capacity through acquisitions, be it the 4.8-million tonne plant of Jaypee Cement in Gujarat or entry into the Middle-East through its acquisition of ETA Star's assets, or the acquisition of Jaiprakash Associates' cement factory in six states for Rs 16,500 crore in February 2016, a month before his retirement. The idea was simple - the bigger the plant, the better the economy of scale and operating performance. This also saw the company entering new markets in India, especially northern and central India. It also changed its portfolio mix by entering the retail segment.
Puranmalka's immense experience has seen the company retain him as a non-executive director of the company with a mandate to turn around the 21-22 million tonne cement factories of Jaiprakash Associates acquired by the company in February 2016. "The growth strategy adopted by UltraTech Cement has led to its stock being one of the most favoured cement stocks among investors, especially foreign investors," says Nitin Bhasin, Head of Research at Ambit Capital. "While Ultratech is improving its operating efficiency, especially the high freight cost, market likes the promise of growth as all have been expecting cyclical infra recovery. Therefore, the high interest in UltraTech Cement in the past few years. The stock used to trade at a discount to its peers like ACC and Ambuja, but its strategy of increasing capacity has seen the stock getting re-rated."
The company under Puranmalka has made the investment on capacity building. Hopefully, UltraTech will take advantage of his moves when the economy fires.