Ultratech Fails To Meet Minimum Limestone Production Requirement In Chhattisgarh

Ultratech Cement Ltd. has received a demand order of Rs 21.13 crore from the Chattisgarh state government. This demand order, issued by the Collector of the Balodabazar Mining Department, stems from the company's failure to meet the minimum production targets outlined in the Mine Development and Production Agreement.

India's largest cement manufacturer is required to comply with specific production quotas outlined in the MDPA. However, Ultratech's shortfall in meeting these targets has led to the issuance of the demand order, citing violations of production requirements specified in the agreement. Specifically, the order pertains to the inadequate production of limestone, a critical raw material for cement manufacturing, in the Balodabazar district.

Ultratech Cement holds significant stakes in the region, contributing over 18% of India's cement capacities in the east. The Balodabazar district, where the demand order originates, boasts substantial limestone reserves and hosts several cement grade limestone mines.

The company operates two grey cement manufacturing facilities in the district, namely Rawan Cement Works and Hirmi Cement Works, both equipped with limestone units. Despite its Rawan-Jhipan Limestone Mine receiving a five-star rating in FY23, Ultratech faces operational efficiency concerns due to the shortfall in limestone production.

Factors contributing to the production deficit could include technical issues such as equipment breakdowns or maintenance requirements, or it may signify resource depletion in the mines. This shortfall not only impacts cement production but also has the potential to drive prices higher in the region due to supply-demand dynamics.

Limestone's crucial role in cement manufacturing underscores the significance of meeting production quotas outlined in agreements with government authorities. Failure to do so not only invites financial penalties but also raises operational efficiency concerns for companies like Ultratech Cement Ltd.