UltraTech 4th largest cement player globally Quarter ended June 30, 2017, impressive results — Mr. Kumar Mangalam Birla, Chairman, UltraTech

Addressing the shareholders at the UltraTech 17th AGM, Mr. Kumar Mangalam Birla, Chairman, stated that – “By focusing on cost optimization and operational efficiencies UltraTech delivered a steady performance. For FY17, UltraTech’s Net Sales stood at Rs.23,616 crore marginally higher than Rs.23,440 crore in the previous year. Profit before interest, depreciation and tax for the year at Rs.5,629 crore is higher by 10 per cent over the previous year. Profit after tax for the year increased by 11 per cent from Rs.2,370 crore in the previous year to Rs.2,628 crore in FY 2017. Consolidated Net Sales stood at Rs.25,092 crore as against Rs.24,880 crore in the previous year. Profit before Interest, Depreciation and Tax at Rs.5,861 crore is 9 per cent higher than Rs.5,365 crores and Profit after Tax at Rs.2,715 crore is 10 per cent higher vis-à-vis Rs.2,478 crore in the previous year ”.

On the JAL and JCCL acquisition
Mr. Birla briefed the shareholders on the completion of the acquisition of the cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL). These are spread across the states of Himachal Pradesh, Uttar Pradesh, Uttarakhand, Madhya Pradesh, and Andhra Pradesh, with a capacity of 21.2 million tons. Consequently, the acquired cement plants of JAL and JCCL stand transferred to UltraTech. This acquisition expands the geographic footprint of UltraTech. It enables UltraTech’s entry into the high growth markets of India where greater reinforcement was needed. The operations will be strengthened by process and technological upgradations, leading to enhancement of capacity utilization. Creating synergies in manufacturing, distribution and logistics offer many advantages. Furthermore, economies of scale and reduced lead-time to markets, will be achieved.

Capex committed for an integrated cement plant in MP: Rs.2600 crore
Mr. Birla mentioned that UltraTech would be setting up an integrated cement plant at Dhar, Madhya Pradesh, with a capacity of 3.5 MTPA and at an investment of Rs.2,600 crore. Commercial production is expected to commence by Q4FY19. It will cater to the markets of south-west Madhya Pradesh. This will further enhance UltraTech’s presence in Central India. UltraTech has also commissioned cement grinding units at Nagpur in Maharashtra and at Patliputra in Bihar. These greenfield expansions and the acquisition of the cement plants of JAL and JCCL, shall propel UltraTech’s cement capacity to 96.5 MTPA, by including its overseas operations in the UAE. The capital expenditure cash outflow plan for FY18 is about Rs.2,200 crore. This is mainly for capacity de-bottlenecking projects, regulatory requirements, plant infrastructure and routine maintenance, stated Mr. Birla.

Dividend
A dividend of Rs.10/- per equity share of face value of Rs.10/- was recommended. This entails a cash outgo of Rs.330 crore. Of this UltraTech will absorb the Corporate Tax on dividend amounting to Rs.56 crore.

First quarter performance impressive
Mr. Birla also briefed the shareholders on UltraTech’s performance for the first quarter ended June 30, 2017. UltraTech has achieved Net Sales of Rs.6,533 crore as compared to Rs.6,179 crore in the corresponding period of the previous year. Profit before Interest, Depreciation and Tax is Rs.1,725 crore vis-à-vis Rs. Rs.1,573 crore and Profit after Tax is Rs.897 crore as compared to Rs.775 crore, in the corresponding period of the previous year.

Speaking on the outlook, Mr. Birla was optimistic. In his words, “The Government's focus on infrastructure development, affordable housing, Smart Cities, and Swachh Bharat Abhiyan, among others, are expected to strengthen cement demand and reduce oversupply, which portends well for the sector. The expanse of its presence in the country gives UltraTech the strategic ability to support and participate in the economic growth agenda of the Government of India”.

Furthermore, Mr. Birla commented that UltraTech has a very strong Balance Sheet, robust cash flows and gearing levels that are well within reasonable limits. It enjoys the confidence of its stakeholders, which is well-reflected in its market cap, which is at around USD 17 billion.