To augment production capacity

UltraTech Cement, a part of the Aditya Birla group, on Thursday announced a capital outlay of over Rs.12,000 crore to be spent over the next five years.

Addressing shareholders at the company's 10th annual general meeting, UltraTech Chairman Kumar Mangalam Birla said the funds would be used in increasing the grinding capacity in Gujarat and setting up additional grinding units across locations, setting up Clinkerisation plants through brownfield expansion at Chhattisgarh and Karnataka, installing waste heat recovery systems. The funds would also go towards instituting bulk packaging terminals across various States. ``These projects will be funded through a judicious mix of internal accruals and borrowings. We have a strong balance sheet with a debt-equity ratio of 0.35 and an interest cover of more than 14 times.''

Cement demand

Mr. Birla said cement demand in India had grown around 12 per cent and ``significant capacity additions have resulted in a surplus scenario. We expect additional capacities of around 30 million tpa during this fiscal. These capacity additions which will continue in the current year will lead to a further surplus scenario over the next 18 to 24 months with lower capacity utilizations. In turn these may result in a squeeze, both on price and margins to an extent. I believe, this is a short-lived phenomenon. Given the Government's unrelenting thrust on infrastructure and the booming housing sector, the cement business can only go forward.''

Post the amalgamation of Samruddhi Cement, UltraTech Cement is poised to become the largest cement company in India with a pan India presence, market share of 20 per cent and capacities of 49 million tonnes per annum of grey cement across 22 plants, 504 MW captive thermal power plants and 9.5 million cubic metres of Ready Mix concrete across 73 plants.

He informed that UltraTech aspired to have a formidable presence in the Indian Ocean rim. As a step in that direction, ETA Star Cement Company LLC, Dubai, together with its operations in United Arab Emirates (UAE), Bahrain and Bangladesh was acquired. This acqujisition is to be completed shortly and “With the amalgamation of Samruddhi and the acquisition of ETA Star Cement, our capacity will stand augmented to 52 mtpa, making it the 9th largest cement company in the world.

The UltraTech board has recommended a dividend of Rs.6 per share (Rs.5) for 2009-10. In the first quarter of the current financial year, UltraTech announced a lower net profit of Rs.243 crore (Rs.418 crore) on lower net sales of Rs.1,790 crore (Rs.1,953 crore).

The operating profit was also lower at Rs.454 crore (Rs.751 crore). Mr. Birla attributed the performance to a surplus scenario in the primary markets, logistics constraints coupled with the increase in the price of coal and raw material like slag and fly-ash.

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