India’s Aditya Birla Group Friday said the group is looking to buy coal mines overseas to lower input costs, just as one of the group companies, Ultratech Cement Ltd reported flat first quarter profits, partly due to rising coal prices.
"We are open to acquiring coal mines. Ultratech is looking for mines in South Africa and at the group level we are looking for mines in Indonesia," Chief Financial Officer KC Birla said at a press conference.
"We understand that coal is very critical. We need to go for acquisitions...coal prices rising to current $215/t from $155/t in the fourth quarter is likely to have an INR10 ($0.23) a bag impact on us," Birla told Dow Jones Newswires.
Birla explained the government in the long term is cutting down on coal supplies from state-run coal miners and going forward there will be less availability of indigenous coal.
"By financial year 2010, the group intends to have a combined (cement manufacturing) capacity of 50 million tons a year and considering that the cement industry will grow at 10%, our combined coal requirement would go up," Birla said.
Ultratech Cement’s net profit in the April-June quarter was INR2.65bn, compared with INR2.59bn a year earlier.
Net sales rose to INR14.96bn from INR13.65bn.
Birla said the company, which is India’s largest exporter of clinker and cement, couldn’t export 200,000t of cement in the first quarter due to an export ban by the federal government.
The federal government put a temporary ban on April 11, even though companies were later allowed to export from Gujarat port starting May 27.
"Cement prices have also been contained by the company, given the government’s concern on inflation, despite higher input costs," the statement said.