UltraTech announces results for the quarter ended 30 June 2008

1st July, 2008

18 July 2008

UltraTech announces results for the quarter ended 30 June 2008

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Entry into the Middle East to acquire controlling stake in ETA Star Cement

Particulars Quarter ended
  30 June 2008 30 June 2007
Net sales 1,496 1,360
PBIDT 3472 462
Profit after tax 265 259

UltraTech Cement Limited, an Aditya Birla Group company, today announced its unaudited financial results for the quarter ended 30 June 2008.

Financials
For the quarter ended 30 June 2008, the company’s net sales increased by 10 per cent from Rs. 1,360 crore in Q1FY08 to Rs. 1,496 crore. Profit before interest, depreciation and tax at Rs. 472 crore (Rs. 462 crore) and profit after tax at Rs. 265 crore (Rs. 259 crore) were up by 2 per cent. Domestic cement sales volume at 3.81 mmt (3.67 mmt) registered a growth of 4 per cent.

The increase in imported coal prices from US$ 78 pmt to US$ 179 year-on-year have resulted in variable costs going up by 19 per cent. The company’s performance in the first quarter has been further impacted by the export ban for six weeks. The company is the largest exporter of clinker and cement from India. Cement prices have also been contained by the company, given the government’s concern on inflation despite higher input costs, which have not been passed on to the consumer.

These factors collectively have put pressure on operating margins. Consequently, the results of this quarter are lower compared to the previous two quarters.

Capex
The existing capex plans relating to expansion and modernisation are on track. The clinkerisation unit in Andhra Pradesh Cement Works (APCW) has been commissioned. The split grinding unit at Ginigera in Karnataka will go on stream during the first half of the current fiscal. Consequently, the total capacity of the company will increase to 23.1 mmt.

With regard to the 92 mw thermal power plant being set up at Gujarat Cement Works, the first two phases aggregating 46mw have already commenced operations. The remaining two streams of 23mw each will be fully operational during CY08. Additionally, three more thermal power plants aggregating to 135 mw are being set up at APCW, Hirmi Cement Works in Chhattisgarh (HCW) and Awarpur Cement Works in Maharashtra (ACW) respectively. The power plants at APCW and HCW will be commissioned by October 2008.

Upon commissioning the company will have access to around 270 mw of captive thermal power, catering to nearly 80 per cent of the company’s power requirements. This will also result in paring the company’s power cost.

During the quarter, five Ready Mix Concrete plants with a combined capacity of 9 lakh cubic metres were set up. To cater to the growing demand for this segment, additional RMC plants are on the anvil in the current financial year.

The board has further approved a capex of Rs. 1,000 crore. Of this, Rs. 250 crore will be spent on instituting waste heat recovery systems of 25mw across units of the company for generating power out of waste gases. The balance funds will be invested in additional RMC plants, extension of the jetty in Gujarat, new port terminals and other schemes for improving productivity.

Towards all of these capex initiatives, the company has already expended Rs. 2,150 crore. Approximately Rs. 2,050 crore will be spent further during the next three years.

Outlook
The economy in general, including the cement sector, is gravely affected by the escalation in fuel prices, rising interest rates and sluggish economic growth. Unless this is successfully contained, it can slow down construction growth and consequently the demand for cement.

In addition, the commissioning of around 90 million tonnes capacity over the next three years could lead to a surplus scenario by CY09 and exert pressure on cement prices.

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
Email: pragnya.ram@adityabirla.com

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