Home >Companies >UltraTech Cement Q3 profit falls 1.6% on higher finance costs

Mumbai: UltraTech Cement Ltd, India’s biggest cement maker, on Friday reported a marginal drop of 1.6% in net profit for the fiscal third quarter as an increase in finance costs offset an improvement in operating profit.

UltraTech, a part of the Aditya Birla Group, reported a stand-alone net profit of 364 crore for the quarter ended 31 December, compared with a profit of 370 crore in the year-ago period. Sales increased 15% to 5,490 crore.

The numbers are not strictly comparable to those of the year-ago period because they include earnings from the Gujarat units of Jaypee Cement Corp. Ltd, which UltraTech acquired in September 2013 (check), the company said in a statement on Friday.

A Bloomberg poll of 24 analysts had pegged the stand-alone net profit at 395.6 crore on net sales of 5,576 crore.

Finance costs for the quarter rose 70% to 153.9 crore from a year ago. Operating profit increased 28% to 679.02 crore.

“On a sequential basis prices witnessed a downward trend," the company said. “However the on-going cost optimization measures helped in containing costs despite the continuing increase in price of input material and logistic cost."

UltraTech said its board has approved the acquisition of cement business of Jaiprakash Associates Ltd situated in Bela and Sidhi in Madhya Pradesh. The company had announced the acquisition on 23 December.

The capacity of these two plants together is 4.9 million tonne per annum. The deal will increase UltraTech’s domestic cement capacity to 65 mtpa from the current 60 mtpa.

“With the company’s current projects underway, the capacity will stand raised to 71 mtpa in 2016," the firm said.

The acquisition will be financed through an issue of non-convertible debentures worth 4,538 crore and cumulative redeemable preference shares worth 10 lacs. The company will also take over Jaiprakash debt of over 626.5 crore and a negative working capital of 160.5 crore.

The transaction is expected to close in 7 to 9 months.

In its outlook statement, UltraTech said cement demand is expected to grow over 8% and the key value drivers will be renewed government focus on housing and infrastructure spending.

On Friday, shares of Ultratech ended at 3143.15 on BSE, up 0.7%, while the benchmark Sensex rose 0.94% to close at 29,278.84 points.

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