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UltraTech Cement Limited shares financial results

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World Cement,


COVID-19

UltraTech has emerged strong and well prepared in the wake of the ongoing COVID-19 pandemic. The total lockdown period from late March to the end of April 2020, has been a huge challenge for all manufacturing industries. UltraTech has managed the crisis with a sharp focus on operational efficiencies. In the available 68 operating days during this quarter, the company kept a tight control on costs and cash flow, and achieved an effective capacity utilisation of 60% across its network of 54 plants around the country.

General disruption as a result of the lockdown did impact business performance, but with the Government of India and the State Governments taking measured steps towards opening up the economy, some encouraging trends were seen during the latter part of May 2020, driven largely by better than expected pick-up in cement consumption in the rural markets.

The company’s focus on conserving cash continued unabated. The ‘overheads control programme’ initiated by the management cut fixed costs by 21% YoY. Prudent working capital management and control on cash flows are reflected in a reduction of net debt by Rs. 2 209 crores during Q1FY21.

Financials

Consolidated Net Sales was at Rs. 7 563 crores vis-à-vis Rs. 11 229 crores over the corresponding period of the previous year. Profit before interest, depreciation and tax was at Rs. 2 353 crores vis-à-vis Rs. 3 084 crores in the corresponding period of the previous year. Normalised Profit after tax was Rs. 906 crores compared to Rs. 1 281 crores in the corresponding period of the previous year.

On a standalone basis, Net Sales stood at Rs. 7 290 crores (Rs. 10 851 crores). Profit before Interest, Depreciation and Tax was Rs. 2 251 crores (Rs. 2 948 crores) and Normalised Profit After Tax was Rs. 914 crores (Rs. 1 267 crores).

Corporate Development

Krishna Holdings Pte. Ltd, (Krishna), a company incorporated in Singapore and a subsidiary of the company’s wholly-owned subsidiary UltraTech Nathdwara Cement Limited, entered into a binding agreement for divesting its entire equity shareholding of 92.5% in its cement subsidiary. This was done at an Enterprise Value of approx. US$120 million +/- working capital adjustments on closing, subject to the customary closing conditions and regulatory approvals in compliance with the local laws. The transaction should be completed by the end of August 2020 and the sale proceeds will be used to reduce leverage.

Acquisition update

The 14.6 million tpy cement plants acquired during the previous financial year have been making good progress on integration, achieving an Operating EBITDA margin of 21% as compared to the all India average of 28%. Once the markets open up, the performance will improve further in line with the existing operations.

Going Forward

The company is closely monitoring the impact of COVID-19 on its operations. Its capital and financial resources remain entirely protected and its liquidity position is adequately covered. Most importantly, the company continues to remain committed to all its business associates.

Read the article online at: https://www.worldcement.com/indian-subcontinent/29072020/ultratech-cement-limited-shares-financial-results/

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