UltraTech Cement Limited shares financial results

COVID-19

UltraTech’s recovery from the COVID-19 led disruption of the economy during FY21 has been rapid.

The ‘overheads control programme’, prudent working capital management and control on cash flows were the main drivers, aided by quick revival of demand and supply side restoration. This has resulted in the company’s encouraging performance, even during such trying times. UltraTech achieved an effective capacity utilisation of 93% during the quarter.

As part of its commitment to society, UltraTech spent Rs.120 crores towards various initiatives undertaken during the year to support the country in its fight against the pandemic. The company continues to give primacy to the safety and well-being of its employees and business partners. It has also undertaken a vaccination programme for more than 100 000 employees and their dependents.

Q4 FY 2020 – 21

Consolidated Net Sales were at Rs. 14 232 crores vis-à-vis Rs. 10 689 crores over the corresponding period of the previous year. Profit before interest, depreciation and tax was Rs. 3751 crores vis-à-vis Rs. 2645 crores in the corresponding period of the previous year. Profit after tax was Rs. 1775 crores compared to Rs. 1129 crores in the corresponding period of the previous year.

FY 21

For the full year, Consolidated Net Sales were at Rs. 44 239 crores vis-à-vis Rs. 41 781 crores over the previous year. Profit before interest, depreciation and tax was Rs. 12 302 crores vis-à-vis Rs. 9898 crores in the corresponding period of the previous year. Profit after tax was Rs. 5463 crores compared to Rs. 3644 crores in the corresponding period of the previous year.

Dividend

The Board of Directors at their recent meeting have recommended a dividend of 370% at the rate of Rs. 37/- per equity share of face value of Rs.10/- per share, aggregating Rs. 1,068.02 crores. In terms of the provisions of the Finance Act 2020, dividend shall be taxed in the hands of shareholders at applicable rates of tax and the company will withhold tax at source appropriately.

Reducing leverage

UltraTech has successfully reduced Net Debt/EBITDA ratio to 0.55x from 1.72x as of 31 March 2020, which is in line with its endeavour to maintain optimal capital structure.

The loan repayments have been made through free cash flows that the company has generated during the year, despite the challenging circumstances and severe business interruptions during Q1FY21.

Sustainability linked bonds

UltraTech has successfully raised US$400 million, corresponding to approximately Rs.2900 crores by way of issuance of unconditional, unsubordinated and unsecured USD denominated notes (in the form of ‘Sustainability Linked Bonds’), due 16 February 2031 at 2.80% per annum, payable semi-annually on 16 August and 16 February of each year, commencing from 16 August 2021 as per applicable laws. The bonds are listed on the Singapore Exchange Securities Trading Limited.

UltraTech is the first company in India and the second company in Asia to issue sustainability linked bonds.

CAPEX

The Board had earlier sanctioned capacity expansion plans of 19.5 million tons through a mix of brown field and green field expansion covering five integrated cement plants and 12 grinding units. The additional capacity is being created in the fast-growing markets of the east, central and north regions of the country. Most of the orders for equipment have been placed and civil work has also commenced at these locations. Commercial production from these capacities is expected to go on stream in a phased manner, during FY22 and FY23.

Upon completion of the latest round of expansion, the company’s capacity will grow to 136.25 mtpa, reinforcing its position as the third largest cement company in the world, outside of China.

Sustainability

In line with its continuing endeavour towards enhancing environment conservation measures, UltraTech commenced 7 MW of WHRS capacity during the year. With this, the company’s total WHRS capacity stands augmented to 125 MW covering nearly 10% of its current power needs. This is expected to increase to 302 MW by the end of FY23, after completion of the other on-going expansions.

The Science Based Targets Initiative (SBTi) has validated UltraTech’s carbon dioxide (CO₂) emissions reduction targets. In July 2020, the company committed to set ‘science-based targets’ to reduce its greenhouse gas (GHG) emissions. UltraTech has also committed to reduce Scope 1 GHG intensity by 27% by 2032 from the base year of 2017 and Scope 2 GHG intensity by 69% within the same time frame. The Science-Based Target initiative (SBTi) has validated UltraTech’s GHG reduction targets which covers the target to lower its CO₂ intensity in cement to 462 kg net CO₂ per ton of cementitious material (net CO₂/t.cem.) by 2032. As per SBTi, UltraTech’s targets are acceptable and consistent with the global effort to limit temperature rise below the ‘2 °C’ threshold in line with the Paris Agreement.

Going forward

UltraTech’s capital and financial resources remain fully protected and its liquidity position is adequately covered. Most importantly, it continues to remain committed to all its business associates.

While rural and semi-urban housing continue to drive growth, pick-up in government led infrastructure aided incremental cement demand. Pent-up urban demand is also expected to improve.

The company is closely monitoring the impact of the second wave of the pandemic on its operations. With its focus on operational efficiencies and cost control, UltraTech is better prepared for any resulting slowdown in the economy.

Read the article online at: https://www.worldcement.com/indian-subcontinent/10052021/ultratech-cement-limited-shares-financial-results/