Chairman Mr. Kumar Mangalam Birla's key statements at Ultratech Cement’s 14th AGM

Addressing shareholders at UltraTech Cement’s 14^th Annual General Meeting (AGM), Mr. Kumar Mangalam Birla, the company Chairman, remarked, “While 2013 witnessed a rather moderate growth and even as of the moment, the economic outlook is clouded by the geopolitical developments in some regions of the world, 2014 seems marginally better for developed and developing countries as well. In the Indian context, growth continued to hover between 4.5 per cent to 5 per cent in the year 2014. The manufacturing sector’s performance was muted. The government and the Reserve Bank of India initiated a slew of measures, to contain fiscal and current account deficit, basically to stabilise the rupee and bolster investor confidence. The new government has rolled out many initiatives, to address fiscal imbalances and escalate investment activity. These are positives that should result the Indian economy shifting to a higher growth trajectory.”

In FY 2014, the cement industry has had to bear the brunt of the overall economic environment. Demand stayed sluggish. Alongside capacity additions vis-à-vis the incremental demand situation, continued to impair the sector’s advancement. In Mr. Birla’s view this demand supply mismatch is expected to stay for some more time. It will lead to prices remaining under constant pressure.

“The acquisition of the 4.8 mtpa Gujarat Cement Units of Jaypee Cement Corporation Limited, comprising an integrated unit at Sewagram and a grinding unit at Wanakbori at a cost of Rs.3,800 crore, represents a milestone in UltraTech’s growth strategy, strengthening its foothold in the growing western market and bolstering its coastal footprint. With this acquisition the cement capacity of the company stands at 58.8 mtpa in India,” commented Mr. Birla.

During the year UltraTech commissioned:

• A 10,000 TPD clinkerisation plant together with a cement grinding capacity of 1.45 million tonne per annum at Rajashree Cement Works, Karnataka
• A 1.6 million tonne per annum cement grinding unit at Jharsuguda in Odisha
• A 30 mega watt Thermal Power Plant at Rawan Cement Works in Chhattisgarh
• A 25 mega watt Thermal Power Plant at Rajashree Cement Works
• A 25 mega watt Thermal Power Plant at Andhra Pradesh Cement Works and
• A 6.5 mega watt Waste Heat Recovery System at Awarpur Cement Works, Maharashtra

These projects, along with the modernisation capex, entailed a spend of around Rs.2,300 crore during FY14. Mr. Birla, informed that the company has earmarked a capex of Rs.7,000 crore towards expansions, brownfield projects and grinding units at various plants, going forward.

During Q1FY15, UltraTech commissioned a 25 mega watt thermal power plant at Rajashree Cement Works, Karnataka and a 6.5 mega watt Waste Heat Recovery System at Awarpur, Maharashtra. Consequently, its total power capacity (including WHRS) is 709 mega watts. This caters to around 80 per cent of its power requirement.

“UltraTech’s installed capacity has been scaled up to nearly 62 million tonnes annually, inclusive of 3 million tonnes overseas. By early 2016 we expect this to scale up to 70 million tonnes when all of your company’s ongoing projects will be fully commissioned. A judicious mix of internal accruals and borrowings have been used for funding the projects”, apprised Mr. Birla.

Highlighting the growth prospects, this fiscal, Mr. Birla said that “Even as the outlook in the short term continues to remain uncertain, I believe, over the long term demand growth should move up to double digit levels. The growth drivers will be housing and infrastructure.”

Avers Mr. Birla “that UltraTech has a strong balance sheet. It enjoys the confidence of its various stakeholders. Its market cap currently exceeds US$11 billion. In turn, these factors help stoke its future growth and development.”

A recommendation to maintain the dividend at Rs.9/- per equity share of Rs.10/- each was made. This accounts for 13.5 per cent of the net profits. It entails a cash outgo Rs.289 crore, which is inclusive of tax on dividend at Rs.42 crore.

Mr. Birla also apprised the shareholders on the Group’s endeavours to help bring in inclusive growth and to synergising growth with responsibility. He stated that, since its inception, UltraTech has been working towards inclusive growth and sustainable development. The company works intensively in 407 villages in proximity to its manufacturing plants. Its activities are implemented under the aegis of the Aditya Birla Centre for Community Initiatives and Rural Development, led by Mrs. Rajashree Birla. Its focus areas are health care, education, sustainable livelihood, infrastructure and social reform.

The company pursues a project-based approach with a robust implementation structure, monitoring process and teams of professionals in place at its units. Its CSR work is making a difference to the lives of over 12 lakh people. In its own humble way, UltraTech helps in lowering the level of poverty in villages and urban slums near its units.

UltraTech’s sustainable development philosophy is to manage the business in a responsible manner far ahead of legal compliance. The company is a member of Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development, a global voluntary initiative on sustainability. Through this association it is playing a leadership role with Mr. O. P. Puranmalka its Managing Director, as co-chair of the CSI Indian Chapter of CSI global.