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Aditya Birla Group's UltraTech Cement has reported a net profit of Rs 319 crore (Rs 499 crore) in the third quarter of this fiscal, a fall of 36 per cent. Net sales were up a tad at Rs 3,715 crore (Rs 3,682 crore).
The company produced 9.30 million tonnes (8.99 mt) of grey cement. Domestic sales were 9.16 mt (9.05 mt). The company produced 147,000 tonnes (138,000 tonnes) of white cement and sold 144,000 tonnes (130,000 tonnes).
While raw material costs increased 73 per cent to Rs 504 crore (Rs 291 crore), the power and fuel bill more than doubled to Rs 896 crore (Rs 356 crore). Freight, likewise, was higher at Rs 728 crore (Rs 293 crore). Employee cost trebled to Rs 188 crore (Rs 63 crore) on the back of an annual increment.
Mr K.C. Birla, Chief Financial Officer, UltraTech Cement, told Business Line that the industry grew by just 2.6 per cent in the December quarter against 7-8 per cent in the comparative quarter last year. Demand was affected by the prolonged monsoon and slowdown in the realty and infrastructure sectors.
“The southern region logged a 9.7 per cent drop in demand against an increase of 9.2 per cent. Political uncertainty over the Telangana issue in Andhra Pradesh led to a 29 per cent fall in demand, while in Kerala it was down 4.6 per cent due to delay in implementation of Government projects,” he said.
Coal on fire
Coal prices during the December quarter increased 36 per cent to $125 a tonne ($92 a tonne). Prices were higher by 14 per cent when compared to the preceding September quarter.
“We do not expect any respite from high coal prices which have already touched $145 a tonne. The industry hopes that the pickup in demand during the fourth quarter will overcome this effect,” said Mr Birla.
Realisations in the December quarter were lower at Rs 167 for a 50-kg bag against Rs 169 a bag in the comparative quarter last year. However, they improved eight per cent on a sequential basis. The pricing environment may remain challenging with rising energy costs squeezing margins, he said.
The industry saw capacity addition of around 14 million tonnes in the nine months of this fiscal leading to overall (capacity) utilisation falling to 75 per cent. The addition in FY'10 was 60 million tonnes.
“Overall cement demand this fiscal may drop to seven per cent against 10.8 per cent last fiscal. For the nine months ended December, the industry grew by just 5.4 per cent. We expect a growth of 8-10 per cent in the fourth quarter,” said Mr Birla.
Shares of UltraTech Cement were up 0.22 per cent at Rs 1,019 on Tuesday.
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