UltraTech Cement consolidates position

The completion of the company’s acquisition of Binani Cement Ltd. (BCL) was the highlight of the quarter, being completed on 20 November 2018. BCL has become a wholly-owned subsidiary of the company, including the take over of management control and re-constitution of the Board of Directors, effective from 20 November 2018. From 13 December, BCL has been renamed as UltraTech Nathdwara Cement Ltd (UNCL).

The acquisition has provided the company with access to large reserves of high quality limestone. The company’s leadership has thus been consolidated in the fast growing northern and western markets in the country. At the acquired plants, the company is confident of turning around operations, which will benefit all stakeholders and result in synergies from the optimisation of costs and improved realisations.

Acquisition of 21.2 million tpy capacity in 2017

The company has also successfully integrated a 21.2 million tpy cement capacity that was acquired in 2017. With substantial improvements carried out, these plants now operate in line with the company’s existing plants and have achieved a stable capacity of around 75%.

In the central region, one of the company’s plants underwent major overhauling and has achieved cost improvements, from which the company will derive benefits from 4Q18. As planned, the acquisition is generating incremental earnings that are growing month on month.

Financials

The company’s net sales rose 19% to INR 92.6 billion from INR 77.8 billion in the previous year. Profit before interest, depreciation, and tax was INR 15.5 billion, compared to INR 14.9 billion in 4Q17.

Domestic sales volume jumped by 15% over 3Q18, while higher fuel and energy costs, alongside rupee depreciation resulted in costs increasing by 11% over 3Q18. In addition, interest costs are reported to be higher, due to loans raised for the acquisition of UNCL.

Corporate Developments

A scheme of arrangement between Century Textiles and Industries Ltd., UltraTech, and their respective shareholders and creditors has received the approval of the stock exchanges, the Competition Commission of India, and the shareholders of the company. This scheme was earlier approved by the board of directors and is now subject to the approval of the National Company Law Tribunal and other regulatory authorities, as may be required.

Outlook

The company has stated that demand is witnessing an upward movement, with higher spends on infrastructure and a government sponsored housing programme. With the additional capacities acquired by the company and its rapid ramp up, UltraTech has stated that it is well placed to participate in the growth of the economy.

Read the article online at: https://www.worldcement.com/indian-subcontinent/25012019/ultratech-cement-consolidates-position/