UltraTech Cement, an Aditya Birla Group company, seems to be firing on all cylinders. It has already started realising the benefit of over 34 million tonne of capacity addition through the Jaypee Cement and Binani Cement acquisitions.

In an interview with BusinessLine , Atul Daga, Director and Chief Financial Officer, said he expects better demand to boost the company’s performance in the coming days. Excerpts:

Do you expect the cost of operations to remain subdued in the coming quarters?

The company is implementing various projects to bring down costs. We have managed to reduce costs by 8-10 per cent last quarter compared to the December quarter by negotiating better prices on our raw material purchases. There are specific projects being executed in the acquired Binani and JP Cement assets that will bring down costs by ₹50 a tonne this quarter.

Have you managed to increase prices with strong demand?

Prices have remained stable despite robust demand. In a few States it has actually corrected itself due to a slowdown in demand on the back of elections. We are seeing a pick-up in demand from mid-income housing projects but demand from luxury housing projects is yet to recover.

What will be your capital expenditure this fiscal?

We will be spending about ₹1,500 crore this fiscal. The capex will largely be on efficiency improvement across plants. No fresh capacity is being added. We have already reduced the cost of operations at Binani plants by ₹200 a tonne.

An increase in capacity utilisation along with efficiency improvement will add to the bottomline.

What is stopping companies from putting in fresh capacity if the demand is expected to be robust?

The fresh capacity addition has slowed down to less than 3 per cent. Most of the cement companies have stressed balance-sheets. Moreover, the cost of acquiring limestone mines through an open auction has become a costly affair.

Has the problem of supply exceeding demand eased?

With the demand improving and fresh capacity additions slowing, the mismatch between demand and supply has eased. However, we have a long way to go before this issue is resolved. The overall demand in India is estimated at 340 million tonnes while the industry capacity is 480 mt.

How much will you realise from the sale of overseas assets?

We have just started the process of sale and it is very difficult to put a number on the deal size. The assets that we are planning to sell are part of Binani Cement. They had 2 mt capacity in the UAE and 3 mt in China.

We have also put on the block Binani’s fibreglass manufacturing facility in Europe. The unit has an Ebitda of ₹300 crore.

When do you expect to complete the Century Textile cement asset buy?

It is very difficult to set a timeline for the completion of the deal, but we are ready with the integration plan. The next hearing of the NCLT is on May 3 and the final order is expected in June.

The transfer of limestone mines will be concluded after the final order from the NCLT. The limestone mines of Binani Cement have been retained as a separate entity and are now a subsidiary of UltraTech Cement.

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