UltraTech Q4 net up 22% on strong cement prices

MUMBAI: UltraTech Cement, a unit of Aditya Birla group, has reported a 22% rise in its fiscal fourth quarter net profit led by strong product prices and better usage of its installed capacity. However, a sharp rise in costs of power and fuel has affected the company���s operating margin which could continue in the near term.

UltraTech, which is also India���s second-largest cement maker, posted a net profit of Rs 283 crore in the January-March quarter, compared with Rs 232 crore last year. Revenue in the same period totalled to Rs 1,602 crore, a rise of 9.3% over last year. For the full year, net profit rose 29% to Rs 1,008 crore, while revenue was up 12% at Rs 5,509 crore.

���Cement prices have been strong year-on-year, but sequentially, the price rise was less than the rise in costs,��� said president KC Birla. While cement prices in the fourth quarter grew 4% compared to the third quarter, costs like power, coal, fly ash rose 10% over the same period.

This brought down the operating margin to 32% from the previous 35%. Although the Aditya Birla group company imports half of its coal requirement, the company has, unlike other Indian companies, no plans to own a coal mine overseas.

Cement and steel companies have recently been scouting for coal mines in resource-rich nations like Indonesia, South Africa and Australia, to either acquire such mines or form joint ventures with local companies. Coal accounts for 40% of the total production cost for UltraTech.

The company is however planning to increase captive power by building power plants at its various units as part of a capacity expansion programme.

The company, which currently makes 17 million tonne of cement, is in the middle of a 1.2 mt expansion and will also subsequently add 4.9 mt at its Tadpatri unit in Andhra Pradesh. The expansion will also include 192 megawatt of power.

The total cost of the expansion is Rs 3,000 crore and UltraTech is scheduled to spend Rs 1,800 crore this fiscal, said Mr Birla. UltraTech is also expected to add to the local cement supplies.

In line with government norms, the company will divert 2.8 mt of cement and clinker export, to the local market in Gujarat and Maharashtra, which are near to the coast.