UltraTech announces financial results for the quarter ended 30th September, 2019

UltraTech Cement Limited, today announced its unaudited financial results for the quarter ended 30th September, 2019.

Scheme of Demerger: Acquisition of Century’s Cement Business

UltraTech completed the acquisition of Century’s cement business, with the Scheme of Demerger becoming effective from 1st October, 2019. With this acquisition, UltraTech’s cement manufacturing capacity stands augmented to 117.4 mtpa, including its overseas capacity. This makes UltraTech the 3rd largest cement company in the world, outside of China. It is also the only company in the world to have a capacity of over 100 million tons in a single country, outside of China. 

UltraTech has allotted 13,961,960 equity shares of Rs.10/- each to shareholders of Century as on 14th October, 2019, being the Record Date fixed by Century in terms of the Scheme.

The National Company Law Tribunal, Mumbai Bench, while sanctioning the Scheme has fixed 20th May, 2018 as the Appointed Date. Consequently, the Company’s financials have been restated from that date, to include the financials of the acquired Century cement business.

The quarter witnessed depressed cement demand, on account of the extended monsoons and heavy floods in almost all parts of the country. The situation was more aggravated in Eastern and Central India, where Century’s cement plants are located. These plants had also undertaken major planned annual shut downs during the period. All of these factors impacted the performance of the acquired cement plants of Century. UltraTech’s pan India presence enabled it to take advantage of the favourable demand situation in the markets of North India. Given its vast experience in integrating acquired Units with its existing operations and bringing them up to its operating standards, the Company is focused on replicating the same for the acquired cement plants.

Financials

Consolidated Net Sales was Rs.9,491 crore compared to Rs.9,088 crore over the corresponding period in FY19. Profit before Interest, Depreciation and Tax was Rs.2,072 crore vis-à-vis Rs.1,564 crore and Profit after Tax was Rs.579 crore compared to Rs.356 crore.

Annual maintenance undertaken during the quarter, resulted in variable costs increasing 3per cent compared to the previous quarter. On the other hand, energy cost was down 9per cent, attributable to increase in share of green power consumption from 8.4 per cent in Q2FY19 to 10.5 per cent during the quarter; reduced power consumption and sustained energy gains.

Corporate Developments

UltraTech Nathdwara Cement Limited

With major overhauling of the plants and completion of quality upgradation, UltraTech Nathdwara Cement Limited is fully integrated with the UltraTech systems and processes. The plants have achieved optimal efficiencies. During this period major maintenance shutdown was undertaken by the Company resulting in higher costs and lower capacity utilisation. However, the Company has recorded a robust performance operating in the northern markets. It has broken even at PAT despite a higher interest burden.

Acquisition in FY18

The 21.2 mtpa cement capacity acquired from Jaiprakash Associates in June, 2017 are operating in line with the existing plants of the Company and have achieved PBT break-even during the previous quarter. The Bara Grinding Unit is scheduled for commissioning during Q3-FY20.

Capex

The Board at its meeting held today approved capex of Rs.940 crore for making premium products with an increase in its grinding capacities in Bihar and West Bengal by 0.6 mtpa each and a new grinding unit of 2.2 million tons in Odisha. This will further strengthen the Company’s position in the eastern markets. All the plants will be commissioned by January – March, 2021.

Outlook

On the basis of positive demand seen in North India in Q2 as many parts of North India were not impacted by heavy rains and floods, there is a good possibility of a normalized demand for cement going forward.  The Government’s firm commitment to revive the economy and the thrust on infrastructure spending augur well for the growth of cement demand.  The heavy rains in the country should also prove beneficial for the kharif crop, which should again help revive rural demand.  The company with its presence across all the zones in the country, is the best positioned to take advantage of the revival in cement demand, despite the anomalies that may get created in demand patterns in some parts of the country due to extraneous reasons.