Ultratech Cement’s Q2 net down 31 per cent to Rs 423 cr
A sharp increase in operating costs, primarily due to rise in fuel prices, impacted the net profit of UltraTech Cement, which came in lower by 31% year-on-year at Rs 423 crore for the three months ended September 30. The energy costs at the Aditya Birla Group company were up a steep 26% y-o-y as the pet coke and coal prices remained at high levels. Pet coke prices were up 70% at $95 per tonne. Logistics cost was up 5% y-o-y due to increased diesel costs and sales pattern change, while the raw material costs were up 3% with a rise in slag prices and increased additive usage. Depreciation amount was also higher at Rs 522 crore and interest cost more than doubled during the quarter to Rs 388 crore due to the acquisition of cement plants by the firm. The net sales of the company were up a good 20% y-o-y at Rs 6,840 crore. Domestic sales volume increased 18% to 12.41 million tonnes, while exports were up by 16% y-o-y. The company’s capacity stood at 89 million tonnes per annum (MTPA) during July-September 2017, including the 4 MTPA capacity of Bara grinding unit, which is under commissioning. Profit before interest, depreciation and tax at Rs 1,550 crore was higher by 13% vis-à-vis Rs 1,378 crore in the corresponding period of the previous year. Increased depreciation and higher interest cost relating to the acquired cement plants resulted in profit after tax of Rs 423 crore as compared to Rs 614 crore in Q2FY17. This quarter continued to witness increasing cost trends, attributable to increase in fuel prices.
Ebitda (earnings before interest, tax, depreciation and amortisation) increased 13% y-o-y to Rs 1,550 crore, while the operating margins were lower by 100 basis points at 23%. Meanwhile, the firm’s board approved an investment of Rs 194 crore for putting up a 4-LMT capacity wall care putty plant to cater to the rising demand. The plant is expected to be commissioned during September 2020. In a statement, UltraTech said upon completing the acquisition of the cement plants having a capacity of 21.2 MTPA, the company’s cement capacity stands augmented to 93 MTPA. The acquisition will enhance the company’s footprint into high growth markets of India in central India, Himachal Pradesh, eastern Uttar Pradesh and coastal Andhra Pradesh, where the company has been focusing to increase its presence.
“This being the first quarter of operations post acquisition, the company has injected the much needed working capital. The most critical aspect has been to improve and stabilise the quality of cement being manufactured at these plants and bringing it up to the company’s standard. Towards this, initial one-time expenses were undertaken for improving efficiencies and plant maintenance. In parallel, new dealers have been appointed to penetrate the markets. The company also completed a successful transition of the acquired cement plants to the ‘UltraTech’ brand,” the statement said. The company said the acquisition was completed with the onset of monsoons and acute shortage of sand in most of the markets, which impacted performance. Commenting on the outlook, the company said in a statement that government spending on infrastructure, rural and affordable housing will be the key demand drivers.