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UltraTech Cement hosted
conference call on October 19, 2023. In the conference call the company was
represented by Mr K C Jhanwar Managing Director and Mr Atul Daga-Executive
Director and CFO.
Key Takeaways of the call
Revenues stood at Rs 16012
crore in Q2FY2024.
Domestic Volumes grew
by 15%YoY in Q2FY2024 and international volumes grew by 16% YoY. Domestic
volume growth was despite erratic monsoon.
Capacity utilization
stood at 75% in Q2FY2024.
Cost:
Since Russia Ukraine war commenced coal
prices had shot up to US $ 400/ ton and Pet coke prices had shot up to US $
250/ton. Since than pet coke prices has declined to around US$ 100/ton for a
brief period around 1st week of June 2023 and again has increased to
around US $ 140.
Pet coke cost which constituted 39% of
total fuel stood at US $ 138/ton in Q2FY2024.
Blended fuel cost stood at US$ 162/ton in
Q2FY2024 when compared to US$ 178/ton in QFY2024.
Fuel mix for the quarter was 51% imported
coal, 6% domestic coal, 39% pet-coke and 4 % alternate fuel.
Per k cal cost stood at Rs 2.184 in
Q2FY2024.
In Q2 FY2024 there was high maintenance
cost. The company under took maintenance of 24 klins which is regular in
nature.
Cost of power from grid is in the range of
Rs 6-8/ per unit and renewable power cost is around Rs 4 per unit.
If every thing remains stable reduction of
around US $ 10/ ton can be expected for fuel cost.
Also, the company celebrated the crossing
of 100 MT volumes in FY2023 and provided bonus to its employees to the tune of
Rs 40 crore which is one off.
Green fuel constituted 22% of the total
fuel consumption and the company plans to take it to 60% by 2025-26.
Prices: Selling prices also keep fluctuating and given the pressure on cost
the company expects prices to hold unless some companies are able to sell.
Compared to exit of June, the prices have
increased by7-8%. From June exit till September exit prices increase is around
3% and for the whole quarter average price increase was around 1%.
All India prices are holding steady and
region wise price increase since june
exit in East is around 7-8%, In Maharashtra it is around 7-8%, In South it is
around 5-6%, in north it is around 6-7%
and it has remained flat in Central region.
Expansion:
The company is adding 3 more slag mills
with capacity of 1.8 Million tonnes per annum (MTPA). With this the total
capacity expansion in second phase will be 24.4 MTPA. With the completion of
the second phase of expansion the total capacity of the company will increase
to 159.65 MTPA from current domestic capacity of 132.45 MTPA.
Expansion is progressing as per the
timelines and is expected to be completed by June 2025 in phases.
The company added 2.5 MTPA of capacity in
Q2FY2024 of which 1.3 MTPA is in West Bengal and the balance 1.2 MTPA in grinding
unit through debottlenecking in Gujarat.
The company expects to announce the third
phase of expansion by end of calendar year 2024 which will take the capacity to
around 180 MTPA by2027 and the company expects to increase the capacity to 200
MTPA by 2030. Expansion will be both greenfield and brownfield.
CAPEX: The company has incurred Rs 2545 crore towards capex in Q2FY2024
large part of it is towards expansion. The company also incurred working
capital to the tune of Rs 600 crore.
Net
Debt: Net debt stood at Rs 4917 crore on
consolidated basis as on Sep 2023.
The company continue to remain negative
working capital.
Inventory: The company is holding fuel inventory for 60 days against normal 45
days. The company plans to get back to 45 days inventory by March end 2024.
Lead
distance: Lead distance stood at 406 kms in Q2.
Further 52% of the dispatches are directly to customers.
Trade
sales: Trade sales stood at 67% of the total sales.
Rural sales stood at 63% of the trade sales
which grew 15%.
Premium Eco-friendly sustainable product
mix stood at 21.7% of trade sales, 3% improvement on yoy basis.
RMC prices are increased incrementally by
4% and the company does transfer pricing for cement to RMC units.
The company sees lot of opportunities in
cement itself and does not plan to diversify.
Acquisition: The company can acquire the assets across India except in EAST if
the asset is significantly large.
The company continuously values the assets
and will acquire only those assets which will provide profitable growth
opportunities.
White
cement and Putty: The price of white cement and
putty was subdued however volumes are picking up.
Outlook:
Eastern markets continues to be slow, the
company expects industry volume growth
in the range of 4-5%.
All India cement industry volume growth is
expected to be around 9-11%in FY2024.
Prices are holding except in few markets.
Demand from all sectors is strong, fuelled
by government led infrastructure, rural development and urban residential
demand.
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