PRESS RELEASE

29 July 2010

UltraTech Cement Limited, an Aditya Birla Group company, today announced its unaudited financial results for the quarter ended 30 June 2010.

Financials
Net sales stood at Rs. 1,790 crore as compared to Rs. 1,953 crore in the corresponding period of the earlier year. Profit before interest, depreciation and tax is Rs. 454 crore and profit after tax is Rs. 243 crore vis-a-vis Rs. 751 crore and Rs. 418 crore respectively, in the corresponding period of the previous year.

The company produced 4.63 mmt (4.52 mmt) of cement during the quarter, reflecting a growth of 2 per cent YoY. The combined cement and clinker sales of 5.12 mmt.

These results have to be viewed in the light of the oversupply scenario in the sector together with logistics and cost pressures.

There have been capacity additions in excess of 60 mtpa in the previous year. This has resulted in an oversupply scenario. Markets of South India which account for around 33 per cent of the company's total sales volume, continued to be adversely affected due to lower off take and a shortage of wagons. The markets of Western and Eastern India were constrained on account of logistics and partial disruption in operations.

Although prices remained flat sequentially, there was a sharp fall as compared to Q1FY10.

Moving on to costs, prices of coal, raw material such as slag and fly-ash and transportation expenses have risen considerably. Consequently, costs escalated by 12% compared to Q1FY10. The quarter also witnessed a reduction in coal supply through linkages which compelled the company to increase its coal purchase from the domestic market at a higher price. It had to meet its balance requirement through imports. Imported coal prices rose from US$ 76 pmt to US$110 pmt YoY.

These factors have lead to a squeeze on margins. However sequentially (QoQ), performance has improved.

Capex
The company has an on-going capex plan of around Rs. 2,600 crore. This will be spent over the next three years on augmenting its grinding capacity in Gujarat, installing waste heat recovery systems and setting up of packaging terminals across locations.

The Board, at its meeting held today, has approved an additional capex of around Rs.5,600 crore. This is earmarked for setting up additional clinkerisation plants at Chhattisgarh and Karnataka. The company will also establish grinding units and bulk packaging terminals across various states. Consequent to these expansions, the total cement capacity addition will be 9.2 mtpa.

Together with Samruddhi's capex, the company's total capital outlay extends to over Rs. 10,000 crore to be spent over the next three years. These projects will be funded through a judicious mix of internal accruals and borrowings. The company has a strong balance sheet with a net debt-equity ratio of 0.1 and an interest cover of more than 10 times.

Scheme of amalgamation of Samruddhi and acquisition of ETA Star Cement
The scheme of amalgamation of Samruddhi Cement Limited (Samruddhi) with the company having been approved by the Board, shareholders and respective High Courts, will be effective from 1August 2010. It is operative from the appointed date i.e 1July 2010.

The company will allot around 14.95 crore equity shares to the shareholders of Samruddhi in the ratio of four equity shares of the company of face value Rs.10 each fully paid-up for every seven equity shares of Samruddhi of face value Rs.5 each fully paid-up.

The acquisition of ETA Star Cement is likely to be completed during the quarter.

With the amalgamation of Samruddhi and the acquisition of ETA Star Cement, the company's capacity will stand augmented to 52 mtpa. This makes it the ninth largest cement company in the world.

Outlook
In the short to medium term, there will be pressure on price and margins, given the surplus capacity. However, industry demand is expected to grow around 10 per cent, given the government's initiatives to boost rural development, infrastructure and housing, which augurs well for the company. The outlook for your company remains positive.