UltraTech to add capacity, 1Q disappoints

UltraTech to add capacity, 1Q disappoints
Published: 29 July 2010

UltraTech Cement, India’s biggest cement producer, aims to spend US$1.8bn to add 9Mt of new capacity over the next three years, The Economic Times of India reports.

UltraTech, part of the diversified Aditya Birla group, will spend INR56bn (US$1.2bn) to set up clinker plants in central and south India, the company said in a statement on Thursday.

It is already spending INR26bn on grinding capacity in western India and on waste heat recovery systems and packaging terminals across India. The total spend will be funded from internal accruals and debt.

UltraTech posted a 42 per cent slump in quarterly profit on Thursday, but was ahead of market forecasts, which helped shares recover losses. The company said April-June net profit fell to INR2.43bn from INR4.18bn a year earlier, following an about 20 per cent fall in cement prices and a rise in raw material and fuel costs. Net sales dropped to INR17.9bn from INR19.53bn.

"Although prices remained flat sequentially, there was a sharp fall compared with Q1 of FY10," UltraTech said. The company was also forced to buy coal at higher market prices following a reduction in subsidised supply by the government. Freight costs ran up 18 per cent from last year, raw material costs rose 14 percent in the quarter, while power and fuel costs increased eight per cent, the company said.