Date:19/07/2008 URL: http://www.thehindu.com/2008/07/19/stories/2008071955131500.htm

Business

High input costs impact UltraTech’s first quarter performance

Special Correspondent

Board approves additional capital expenditure of Rs. 1,000 crore

— Photo: SHASHI ASHIWAL

COST PRESSURE: Kumar Mangalam Birla (right), Chairman, UltraTech Cement and Rajashree Birla, Director at the company’s annual general meeting in Mumbai on Friday.

MUMBAI: A combination of spiralling input costs and almost unchanged cement prices have impacted UltraTech Cement’s performance in the first quarter of the current fiscal. It reported a 2-per cent higher net profit at Rs. 265 crore (Rs. 259 crore) on a 10 per cent higher net sales of Rs. 1,496 crore (Rs. 1,360 crore).

The company’s profit before interest, depreciation and tax was up 2 per cent at Rs. 472 crore (Rs. 462 crore). The board has recommended a dividend of Rs. 5 per share.

Addressing shareholders at the company’s eighth annual general meeting, UltraTech Cement Chairman Kumar Manglam Birla said, “these results are lower than that of the preceding quarter, reflecting the impact of higher input costs which have not been passed on to the consumer. For instance, coal prices have gone up from $78 in the first quarter last year to $179 a tonne in the first quarter of 2008-09. Cement prices have also been contained given the government’s concern on inflation. The company’s performance in the first quarter has been further impacted by the export ban for six weeks bearing in mind that UltraTech is the largest exporter of clinker and cement from India.”

The company has spent Rs. 1,800 crore as part of its capital expenditure initiatives during the year and will spend about Rs. 2,050 crore over the next three years.

The board of the company has approved an additional capital expendi- ture of Rs. 1,000 crore, of which Rs. 250 crore will be spent on setting up a waste heat recovery systems of 25 MW across all the company’s units.

The balance will be invested in setting up additional ready mix concrete plants (Rs. 142 crore), extension of the jetty in Gujarat, new port terminals (Rs. 470 crore), mining of land (Rs. 287 crore) and other schemes for improving productivity.