29 April 2010
UltraTech Cement announces financial results for year ended 31 March 2010
Entry into the Middle East to acquire controlling stake in ETA Star Cement
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UltraTech Cement, an Aditya Birla Group company, today announced its financial results for the year ended 31 March 2010.
Financials –; FY 2010
The company has achieved net revenues of Rs.7,050 crore (Rs.6,383 crore) registering a growth of 10% on the back of higher sales volume. Profit before interest, depreciation and tax was Rs.2,094 crore (Rs.1,810 crore). Profit after tax at Rs.1,093 crore was up by 12% after providing for interest of Rs.118 crore (Rs.126 crore), depreciation of Rs.388 crore (Rs.323 crore) and tax of Rs.495 crore (Rs.384 crore). Cash profit at Rs.1,589 crore (Rs.1,481 crore) was higher by 7%.
The company produced 17.6 MMT of cement (15.9 MMT) reflecting a rise of 11%. The effective utilisation on expanded capacity was 88% (96%). Domestic sales volume at 17.8 MMT (15.8 MMT) was up by 13%, while overall sales volume registered a growth of 11% from 18.2 MMT in FY09 to 20.2 MMT in FY10.
The company has a strong balance sheet with a debt equity ratio of 0.35 and an interest cover of more than 14 times.
Financials –; Q4FY10
The company achieved net revenues of Rs.1,909 crore (Rs.1,860 crore), higher by 3%. Profit before interest, depreciation and tax was Rs.428 crore (Rs.562 crore). Profit after tax at Rs.229 crore (Rs.309 crore) was lower by 26% after providing for interest of Rs.28 crore (Rs.34 crore), depreciation of Rs.99 crore (Rs.91 crore) and tax of Rs.72 crore (Rs.128 crore).
The company produced 5.0 MMT of cement (4.6 MMT) up by 8%. Effective capacity utilisation on expanded capacity was 97% (107%).
Domestic and export realisation was lower as compared to Q4FY09. This has impacted profitability to some extent.
Acquisition of ETA Star Cement in UAE, Bahrain and Bangladesh
The Board at its meeting today approved the acquisition of ETA Star Cement Company LLC, Dubai, together with its cement operations in United Arab Emirates (UAE), Bahrain and Bangladesh. The acquisition will be carried out by capitalising ‘UltraTech Cement Middle East Investments Limited’ (“UCMEIL”), the company’s wholly-owned subsidiary in UAE.
ETA Star Cement is promoted by the ETA Group. ETA Group is a leading UAE conglomerate involved, among other things, in engineering and construction, shipping, commodity trading, auto trading, building materials, property development and retail businesses.
ETA Star Cement’s manufacturing facilities include a 2.3mtpa clinkerisation plant and 2.1mtpa of cement grinding capacity in the UAE, 0.4mtpa and 0.5mtpa of cement grinding capacity in Bahrain and Bangladesh respectively. UCMEIL will acquire management control and equity stake at all the locations. The enterprise value of these assets works out to around Rs.1,700 crore.
UltraTech Cement, India, currently exports cement and clinker to the Middle East. With this acquisition, it will gain direct access to the markets in the Middle East and adjoining regions.
Remarks Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group, “The acquisition of ETA Star Cement marks the entry of the Aditya Birla Group Cement Business into the Middle East. It is in line with our long-term strategy of expanding our global presence across businesses and is consistent with our vision of taking India to the world.”
Mr. O. P. Puranmalka, Whole-time Director of the company, said, “The acquisition of ETA Star Cement will give us immediate scale and a footprint in the Indian Ocean Rim without disturbing the market matrix. This acquisition together with the amalgamation of Samruddhi Cement with UltraTech will enhance UltraTech’s capacity to around 52mtpa.”
Commenting on the acquisition, Mr. K.C. Birla, CFO, UltraTech Cement said, “This acquisition fits in with the company’s growth strategy and will add value for its stakeholders. The transaction is also EPS accretive. We will use a judicious mix of internal accrual and borrowings for funding the same.
The acquisition of Star Group is likely to be completed by the end of Q1FY11.
The Board of Directors at their meeting held today recommended a dividend of 60%, at the rate of Rs.6/- per share of face value of Rs.10/- each aggregating to Rs.74.69 crore. The company will absorb the corporate tax on dividend amounting to Rs.12.41crore, resulting in a total payout of Rs.87.10 crore.
Scheme of Amalgamation
The Board of Directors at its meeting held on 15 November 2009 approved a Scheme of Amalgamation (“the Scheme”) of Samruddhi Cement Limited (“Samruddhi”) with the company in terms of the provisions of sections 391 to 394 and other relevant provisions of the Companies Act, 1956. The Scheme has also been approved by the shareholders, secured creditors (including debenture holders) and unsecured creditors of the company. The appointed date of the Scheme is 1 July 2010 or such other date as may be determined by the Board of Directors of the company and Samruddhi.
Petitions seeking sanction for the Scheme have been filed with the high court at Bombay and high court at Gujarat. The Scheme will be effective after sanction from the respective high courts as also the effectiveness of the Scheme of Arrangement between Samruddhi and Grasim Industries Limited (“Grasim”) in relation to the transfer of the cement business of Grasim to Samruddhi.
On completion of this Scheme, UltraTech is expected to emerge as the largest cement and RMC entity in the country, and the 10th largest in the world in cement capacity. The company will also add the speciality products of white cement and WallCare putty to its portfolio.
Mr. S. Misra, Managing Director, retired from the services of the company at the close of business hours on 31 March 2010. He has ceased to be a Director from that date.
Mr. O. P. Puranmalka took over as Whole-time Director with effect from 1 April 2010.
Significant capacity addition during the year, together with the possible addition of around 30mtpa during FY11 may lead to a surplus scenario. Capacity utilisation is expected to be around 80%. These factors are likely to put pressure on prices. Although the additional capacities will hit the market, your company believes that progressive improvement in cement demand attributable to government initiatives in infrastructure and housing bode well for the industry. We expect demand to grow over 10% in the long term.
For more information, contact:
Dr. Pragnya Ram
Group Executive President
Corporate Communications & CSR
Aditya Birla Management Corporation Private Limited
Tel: 91-22-6652 5000 / 2499 5000
Fax: 91-22-6652 5741/ 42
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