 "We expect demand to pick up from this quarter: Atul Daga")
UltraTech Cement, an Aditya Birla Group firm, reported a five per cent rise in revenue for the December 2015 quarter at Rs 5,750 crore and a 40 per cent jump in profit at Rs 509 crore. In addition to higher margins on cost savings and seven per cent volume growth, lower interest and depreciation also boosted profits. Atul Daga, chief financial officer, talks about trends in the coming quarters. Excerpts from an interview with Dev Chatterjee and Chandan Kishore Kant.
UltraTech's profits are far better than expected. Has there been any rise in demand from infrastructure firms?
Yes, we have noticed a rise in demand across the country, especially from the road sector, in the December quarter. Mobilisation by road companies has begun and our volumes grew seven per cent. We are expecting this to continue in the current quarter and for the rest of the year. In the 'Housing for all' programme, some states such as Bihar, Jharkhand and Andhra Pradesh are expected to start work, leading to a rise in demand of cement. We are bullish about demand in the coming quarters as the government awards more projects in the infrastructure sector.
The company benefited a lot from the lower costs of coal and petcoke. We also reduced our power offtake as our volumes improved over the last year. Although pricing remained flat, capacity utilisation was 70 per cent, compared to 65 per cent for the rest of the industry. Demand from south India was low due to the Chennai floods and poor availability of sand. But, we expect demand to pick up from this quarter.
Is UltraTech in the race to take over Jaypee's cement business? We understand KKR, JSW and UltraTech are likely to bid for Jaypee's 19 million tonnes per annum capacity...
As of today, 10 per cent of India's cement capacity is up for sale. As and when we get a good opportunity, we will look at it. But, nothing is finalised as yet.
UltraTech's profits are far better than expected. Has there been any rise in demand from infrastructure firms?
Yes, we have noticed a rise in demand across the country, especially from the road sector, in the December quarter. Mobilisation by road companies has begun and our volumes grew seven per cent. We are expecting this to continue in the current quarter and for the rest of the year. In the 'Housing for all' programme, some states such as Bihar, Jharkhand and Andhra Pradesh are expected to start work, leading to a rise in demand of cement. We are bullish about demand in the coming quarters as the government awards more projects in the infrastructure sector.
Also Read
What led to better profits, considering a large number of Indian companies are still struggling?
The company benefited a lot from the lower costs of coal and petcoke. We also reduced our power offtake as our volumes improved over the last year. Although pricing remained flat, capacity utilisation was 70 per cent, compared to 65 per cent for the rest of the industry. Demand from south India was low due to the Chennai floods and poor availability of sand. But, we expect demand to pick up from this quarter.
Is UltraTech in the race to take over Jaypee's cement business? We understand KKR, JSW and UltraTech are likely to bid for Jaypee's 19 million tonnes per annum capacity...
As of today, 10 per cent of India's cement capacity is up for sale. As and when we get a good opportunity, we will look at it. But, nothing is finalised as yet.