The Hindu Business Line : UltraTech draws up Rs 200-cr capex plan

ULTRATECH Cemco's (earlier L&T Cement) new brand rollout on Thursday (October 14), starting with Kochi; a Rs 200-crore capex plan for the next two years that will generate around 2.5 million tonnes of capacity through debottlenecking; and reduction of the company's debt equity ratio are on the cards, under its new promoter, the Aditya Birla group.

The new brand, as yet undisclosed, will phase out the L&T brand by March 2005, until which time the company has permission to use it, said Mr Kumar Mangalam Birla, Chairman of the company, at its annual general meeting here today.

Around Rs 200 crore is planned to be invested in UltraTech during the current fiscal; this will largely go towards modernisation and debottlenecking of its existing plants which is likely to generate an additional 2.5 million tonnes of capacity, Mr Birla said replying to shareholders' queries.

The board of directors currently do not have any plans to merge the company into any of the AV Birla companies, he said.

Of the company's total debt of over Rs 1,500 crore, Rs 700 crore is proposed to be addressed this year. Of this, roughly Rs 150 crore will be paid off to L&T, the amount being borrowings from that company at the beginning of the year. The rest will be refinanced, said the officials of UltraTech, speaking to presspersons after the AGM.

The idea is to reduce the cost of debt from the current rate of 7.7 per cent, to 6.7 per cent by the end of the current financial year. Over the next two years, the debt-equity ratio of the company will be brought down from 1.44:1 to 1:1, said Mr Birla.

As to operating costs, the savings from synergies with Grasim's cement division will be Rs 50 crore in terms of freight and logistics costs during the year.

The management will take a view over the next few months on Narmada Cement for which various claims under the Board for Industrial and Financial Reconstruction have been applied for, he said. UltraTech revenues are expected to improve 15 per cent this fiscal. The company would be open to both organic and inorganic growth.

Replying to shareholders' complaints about the dividend from UltraTech being only 5 per cent, Mr Birla said that as a percentage of the company's cash profit, the dividend payout amounted to 18 per cent compared to Grasim Industries' 19 per cent.