The Hindu Business Line : UltraTech nos boost cement stocks

Mumbai, April 22 Despite a weak long-term outlook, cement stocks on the BSE seem enthused by the good performance posted by UltraTech and Binani Cements.

UltraTech gained 6.79 per cent to Rs 825, India Cements 3.15 per cent to Rs 193, ACC 2.39 per cent to Rs 819, Dalmia Cements 2.26 per cent to Rs 296, Madras Cements 1.39 per cent to Rs 3,400, Ambuja Cements 1.15 per cent to Rs 115 and Binani Cements moved up by 5.52 per cent to Rs 86 on the BSE on Tuesday.

Input cost up

UltraTech reported an increase of 22 per cent in net profit to Rs 283 crore (Rs 232 crore) for the quarter ended March 31, 2008, while for the fiscal 2008 the net profit stood at Rs 1,008 crore (Rs 782 crore).

UltraTech said increase in prices of coal, fly-ash, iron ore and petro products resulted in variable costs rising sharply by 12 per cent, compared with Q4FY’07.

Imported coal prices at $150 per tonne ($74 per tonne), more than doubled in the fourth quarter.

Sequentially, the variable costs rose over 10 per cent, while realisation remained flat, thereby resulting in continuous pressure on the margins, said an analyst with a Mumbai brokerage.

Pressuring cement companies to reduce prices, the Union Finance Minister, Mr P. Chidambaram, on Tuesday said “it is my view that cement manufactures and to some extent steel producers are behaving like a cartel.”

The Monopolies and Restrictive Trade Practices Commission is conducting an inquiry into allegations of cartelisation.

“We are looking at legal and administrative provisions that are available to the Government,” Mr Chidambaram added.

Export ban

The Government recently banned export of clinker and cement to control rise in domestic prices. Ambuja Cement and UltraTech Cement are the major exporters accounting for over 50 per cent of total exports of 3.3 million tonnes last fiscal.

Painting a gloomy outlook for 2009, UltraTech warned that the Government measures to control prices will have an impact on its bottomline in 2009, particularly at a time when the input and freight cost were rising.

“Continuous Government intervention has resulted in an uncertain price environment, which together with significant increase in input costs would have an adverse impact on margins,” UltraTech said.

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