“Strong balance sheet, robust cash flows, market cap of US$14 billion and strategic moves to foster UltraTech’s growth going forward”:Mr. Kumar Mangalam Birla, Chairman

19 July 2016

“UltraTech, today, is the largest cement player in India and the 5th largest on the world stage,” says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group

Addressing shareholders at UltraTech’s 16th Annual General Meeting, Mr. Kumar Mangalam Birla, the Chairman, stated that despite the cement industry remaining passive for most of FY 16, UltraTech had delivered a steady performance. For FY16, net sales stood at Rs.23,841 crore vis-à-vis Rs.22,656 crore – a 5 per cent increase over FY15. Profit before interest, depreciation and tax was Rs.4,851 crore as against Rs.4,569 crore. On a consolidated basis, net sales stood at Rs.25,281 crore vis-à-vis Rs.24,065 crore. Profit before Interest, Depreciation and Tax was Rs.5,109 crore as against is Rs.4,777 crore.

Briefing the shareholders on strategic moves, Mr. Birla mentioned, “UltraTech has entered into definitive agreements with Jaiprakash Associates Limited for the acquisition of its cement plants in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh. The Directors have also approved a Scheme of Arrangement between UltraTech, Jaiprakash Associates Limited, Jaypee Cement Corporation Limited and their respective shareholders and creditors for the acquisition of cement plants of a total capacity of 21.2 MTPA at an enterprise value of Rs.16,189 crore.”

Furthermore, Mr. Birla stated that the proposed transaction is essentially a geographic market expansion which will lead to UltraTech’s entry into growing markets of India. These include the Satna cluster in Uttar Pradesh (East) and Madhya Pradesh (East), Himachal Pradesh, Uttarakhand and coastal Andhra Pradesh. The operations will be strengthened by the consequent technological upgradation and enhancement in capacity utilisation on a year-on-year basis. It will lead to creating synergies in manufacturing, distribution and logistics. As a result advantages such as economies of scale and creation of efficiencies by reducing lead time to markets will be attained. Alongside it will enhance competitiveness benefiting consumers and in turn creating value for shareholders by acquiring ready-to-use assets.”

“The scheme is subject to regulatory approvals. We expect it to be consummated within the next 12 months. UltraTech’s cement capacity then will stand augmented to 91.1 MTPA including its overseas operations,” averred Mr. Birla.

Among other major moves, Mr. Birla alluded to the growing demand for building material. In response to this, he said, “UltraTech has commissioned cement grinding units at Jhajjar in Haryana, Dankuni in West Bengal and Pataliputra in Bihar. A cement bulk terminal went on stream at Pune in Maharashtra. With the commissioning of these assets, UltraTech’s cement capacity in India now stands at 66.3 MTPA. Furthermore, with the addition of 26 MW waste heat recovery systems during the year, the total waste heat recovery capacity is now 59 MW. Besides this, UltraTech has a 717 MW thermal power capacity, both of which cater to more than 88 per cent of its total power requirement.”

He added, “UltraTech, today, is the largest cement player in India and the 5th largest on the world stage.”

Mr. Birla was optimistic on the cement sector. He opined that India is moving on to a higher growth tract. The Government’s focus on infrastructure development, housing sector, smart cities, roads etc, along with good monsoon should drive growth in the agriculture sector. UltraTech, he said, “is positioned across the country to meet the rise in demand and participate in the next phase of growth in the country.”

In Mr. Birla’s words, “UltraTech has a very strong balance sheet, robust cash flows and gearing levels well within reasonable limits. The company enjoys the confidence of its stakeholders, which is well reflected in its market cap, well over US$14 billion.”

As a responsible and caring corporate citizen, UltraTech has resolutely striven towards inclusive growth and sustainable development. Under the aegis of the Aditya Birla Centre for Community Initiatives and Rural Development led by Mrs. Rajashree Birla, UltraTech has been working in 407 villages, in proximity to its manufacturing plants. UltraTech aims to actively contribute to social and economic development in the communities in which it operates. The major areas of focus are education, healthcare, sustainable livelihood, infrastructure development and social reform. As part of responsible stewardship, UltraTech is involved in the development of the technology roadmap “low carbon technology for the Indian cement industry”. Being a member of the Cement Sustainability Initiative, UltraTech is putting in efforts to implement the roadmap to reduce its CO2 emissions and energy consumption. Substitution of fossil fuels and natural raw materials by waste materials is a thrust area for UltraTech. The company is also implementing measures to reduce water consumption. It meets around 49 per cent of its water requirement through rainwater harvesting and recycling.”