Ultratech Cem

The company did not end FY14 on a very good note with performance sulking. Consolidate net sales came in at Rs.21444 crore, which is flat, a rise of less than 1.5% over FY13. Net profit for the year was down 19% at Rs.2206 crore and the fall would have been much more sharper had it not been for the lower tax outgo of Rs.645 crore v/s Rs.1179 crore in FY13. On the other hand, compared to Q3, the performance for Q4 was very good, with net sales coming in at Rs.5832, up 22% QoQ and up 8% on YoY. Net profit was at Rs.838 crore, up by a whopping 126% sequentially and YoY, up 15%. For cement companies, YoY comparisons make more sense as cement companies are seasonal, so each quarter is different from the other but YoY at least they have the same seasonal factors.

The biggest cost for the company remains freight and forwarding charges, which in Q4 was 27% of the total operating cost at Rs.1365 crore and next big one is fuel and power cost, which is 24% of total cost. What surely helped the margins was the tight leash on cost, where optimisation of fuel mix and other initiatives helped in maintaining costs almost at the previous year levels. The company has stated that the year witnessed continuing pressure on input and logistics costs, given the increase in railway freight and a continued hike in diesel prices. There some relief on account of softening in prices of imported coal but this was negated by the depreciation in rupee. At end of FY14, the company’s capacity utilization was at 53.95 mtpa. The entire sector is witnessing a slowdown in demand, given the fact that as against the installed capacity if the sector at 360 mtpa, demand is only 260 mtpa, a gap of 28%.  The company recently bought the 4.8 mtpa cement plant of Jaiprakash for $38 billion  and by 2015, hopes to have a capacity of 70 mtpa v/s the existing 57 mtpa.