Leading cement maker UltraTech Cement today reported a 26.14 per cent decline in its net profit at Rs 228.54 crore for the March quarter from Rs 309.46 crore reported in the same quarter previous fiscal.
The company also announced acquisition of the Dubai-based Star Cement Company for Rs 1,700 crore. The company said in a filing to the Bombay Stock Exchange. It also said the deal is likely to be completed by June.
Net sales, however, rose 2.64 per cent to Rs 1,909.35 crore during the quarter from Rs 1,860.13 crore in the year-ago period, it added.
For the entire 2009-10 fiscal, net profit rose by 11.89 per cent at Rs 1,093.24 crore compared to Rs 977.02 crore in FY09. Net annual sales stood at Rs 7,049.68 crore, up 10.44 per cent over Rs 6,383.08 crore in FY09.
The board recommended a dividend Rs 6 per share,resulting in an outgo of Rs 74.69 crore.
The company sold a total of 20.2 million tonne cement, or 11 per cent more, which included 17.8mt domestic sales.
About the acquisition of Star Cement, the company said its board has approved acquisition of the Dubai firm's entire operations in the UAE, Bahrain and Bangladesh.
"The acquisition of Star Cement marks an entry of the Aditya Birla Group cement business into the Middle East. It is in line with our long-term strategy of expanding our global presence across businesses and is consistent with our vision of taking India to the world," Aditya Birla Group chairman Kumar Mangalam Birla said.
The acquisition will be carried out by capitalising UltraTech Cement Middle East Investments, its wholly-owned subsidiary in the UAE, which "will acquire management control and equity stake at all the locations. The enterprise value of these assets works out to around Rs 1,700 crore," it said.
Star Cement's manufacturing facilities include a 2.3mtpa clinker unit and 2.1 mtpa cement grinding capacity in the UAE. It also has 0.4 mtpa and 0.5 mtpa cement grinding capacities in Bahrain and Bangladesh, respectively.
UltraTech Cement currently exports construction material to the Middle East and with this acquisition, it will gain direct access to Middle East and adjoining regions.
On the outlook for the current fiscal, UltraTech Cement said significant capacity addition of around 30 mtpa will happen during FY11 and it may lead to capacity surplus for it. "Capacity utilisation is expected to be around 80 per cent. These factors are likely to put pressure on prices," the statement said.
