UltraTech Cement consolidated net sales reach INR127.1bn in 3QFY22

UltraTech Cement reports that its consolidated net sales was INR127.1bn (US$1.71bn) in the 3QFY22 when compared with INR121.4bn over the corresponding period of the previous year. Profit after tax jumped eight per cent to INR17.08bn from INR15.84bn. There is a one-time gain of INR5350m in tax for earlier years. 

After gaining pace in October 2021, demand slowed substantially in November, 2021 as a result of the construction ban in the NCR, extended monsoons in the south and a few states in the north, sand issues in the eastern region as well as in parts of Uttar Pradesh, and the Diwali holiday season. 

Operations
The company has maintained a strong growth trajectory, recording a 13.2 per cent growth in its domestic cement sales volumes in the nine months ended December 2021, despite a marginal decline in the reported quarter.  On the cost front, petcoke and international coal prices have started softening during this quarter, though the prevailing rates are still at elevated levels YoY. Diesel prices are up 24 per cent YoY, despite the recent reduction in duty/other levies by the central and state governments. 

Capex
The Board has approved a capex of INR9650m towards modernisation and expansion of capacity at Birla White from the current 6500tpa to 1.253Mta, in a phased manner. The incremental capacity will be operational in a phased manner. The capacity expansion will help Birla White strengthen its presence in the growing white cement market, reducing its dependence on high-cost imports. 

UltraTech commenced operations from its bulk terminal at Kalamboli, Navi Mumbai. This is the company's seventh bulk terminal. The earlier six are located at Cochin in Kerala, Mangalore and Doddaballapur in Karnataka, Uran and Pune in Maharashtra and Shankarpalli in Telangana. With a capacity to handle approximately 1.2Mta cement and considering the large infrastructure development projects in and around Mumbai, the bulk terminal will strengthen the company to further increase its sales of bulk cement. 

The company has taken its total cement manufacturing capacity in India to 114.55 Mta. 

Outlook
During the quarter, trade sales were impacted more than non-trade sales, as overall cement demand remained subdued. With the onset of the peak season and rising construction activities, cement demand is expected to revive in 4QFY22, driven by a pick-up in the government-led infrastructure and housing projects. Rural and urban demand is also expected to pick up going forward.