Ultratech shifts export focus, prefers cement to clinker

Ultratech shifts export focus, prefers cement to clinker
Published: 20 July 2005

As part of the strategy to revive the fortunes of Ultratech Cement and narrow the ’performance gap’ with its parent, Grasim Industries, the Aditya Birla group company, is rejigging its export basket by focusing on cement, where realisations are much higher, and choosing instead to go slow on export of clinker, a cement intermediate. 
Ultratech Cement, which has traditionally been the country’s largest clinker exporter, more than doubled its cement exports to 425,000t in the first quarter, up from 199,000t during the same period last year. Clinker exports, on the other hand, has taken a backseat, having declined by a whopping 65 per cent to 320,000t.
For Ultratech, the shift is understandable as cement currently sells at US$42-45 per tonne in the international markets, while export prices of clinker is currently pegged between US$32 and US$35 per tonne.
Grasim board member and Ultratech Cement director DD Rathi says that while the focus going forward will be on exporting cement, Ultra Tech Cement will continue to export clinker, may be on a reduced scale. 
Analysts say that the export switch to cement would augur well for the company’s profitability. Domestic brokerage Motilal Oswal has predicted a 6.5 per cent increase in Ultratech Cement’s realisations in the first quarter due to the “improving product mix with clinker export being converted into cement export.” 
Ultratech Cement is the country’s largest exporter of cement and clinker, taken on a combined basis. The company exported 0.87Mt of cement and 2.6Mt of clinker in the last fiscal year. Grasim is not a cement exporter as its manufacturing facilities are land-locked, although its subsidiary Shree Digvijay sells small volumes in the international markets. 
Gujarat Ambuja Cements is the country’s largest cement exporter. The cement maker exported 1.8Mt of cement in the last fiscal year and is targeting exports of close to 2Mt in the current fiscal year. Exports of cement and clinker has received a boost in recent months following a construction boom in the Middle East.