MIRA
INFORM REPORT
|
Report Date : |
15.11.2006 |
IDENTIFICATION
DETAILS
|
Name : |
ULTRATECH
CEMENT LIMITED |
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Formerly Known As : |
ULTRATECH CEMCO LIMITED |
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Registered Office : |
B
Wing, 2nd Floor, Ahura Centre, Mahakali Caves Road, Andheri
[East], Mumbai – 400093, Maharashtra |
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Country : |
India |
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Financials (as on) : |
31.03.2006 |
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Date of Incorporation : |
24.08.2000 |
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Com. Reg. No.: |
11-128420 |
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CIN No.: [Company
Identification No.] |
L26940MH2000PLC128420 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMU03782C |
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PAN No.: [Permanent
Account No.] |
AAACL6442L |
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Legal Form : |
A Public Limited Liability Company. The company’s Share listed
on the Stock Exchange. |
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Line of Business : |
Manufacturers, Dealers and Sellers of Cement, Clinker, Lime, Plasters,
Whiting, Clax, Granule, Sand Coke, Fuel, Artificial Stone, Builders
requisites and Convenience of all kinds and any products or things which may
be manufactured out of or with cement or in which the use of cement may be
made. |
RATING & COMMENTS
|
MIRA’s Rating : |
Aa |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
71-85 |
Aa |
Possesses adequate working capital. No
caution needed for credit transaction. It has above average (strong)
capability for payment of interest and principal sums |
Large |
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Maximum Credit Limit : |
USD
41500000 |
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Status : |
Good |
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Payment Behaviour : |
Regular
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Litigation : |
Clear |
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Comments : |
Subject
is an established company having fine track. Financial position is good.
Payments are correct and as per commitments. Trade relations are fair.
Payments are correct and as per commitments. Fundamental are strong and
healthy. The
company can be considered good for any normal business dealings. It can be
regarded a promising business partner in a medium to long-run. |
LOCATIONS
|
Registered Office : |
B
Wing, 2nd Floor, Ahura Centre, Mahakali Caves Road, Andheri
[East], Mumbai – 400093, Maharashtra, India |
|
Tel. No.: |
91-22-66917800 |
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Fax No.: |
91-22-66928109 |
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E-Mail : |
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Website : |
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Central marketing office: |
A Wing, Ahura Centre, Andheri
(East), Mumbai 400 093 |
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Tel.
No.: |
91-22-6691 7360 / 6691 8400 |
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Fax
No.: |
91-22-6691 7361/ 6692 8401 |
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Zonal marketing offices: |
503, Shikhar, Netaji Marg,
Navrangpura, Ahmedabad 380 009 No. 45, "Industry
House", 6th floor, Race Course Road, Bangalore 560 001 23, Anna Salai, Little Mount,
(Above Swaraj Mazda Showroom) Saidapet, Chennai 600 015 503, Aditya Trade Centre,
Ameerpet, Hyderabad 500 038 Constantia Office Complex, 7th
floor, 11, Dr. U. N. Brahmachari Street, Kolkata 700 017 |
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Plant locations : |
Awarpur Cement Works, P.O. Awarpur Cement
Project, Taluka: Korpana, Dist. Chandrapur, Maharashtra 442 917 Hirmi Cement Works, P.O.Hirmi, Taluka:
Simga, Via: Neora, Dist. Raipur, Chhatisgarh 493 195 Gujarat Cement Works, Village: Kovaya,
Taluka: Rajula City, Dist. Amreli, Gujarat 365 541 A.P.Cement Works, Village: Bhogasamudram,
Tadipatri, Anantapur District, Andhra Pradesh 515 415 Jafrabad Works (NCCL), Village: Babarkot,
Taluka: Jafrabad, Dist. Amreli, Gujarat 365 540 West Bengal Cement Works, Near EPIP plot,
Muchipara, Post: Rajbandh, Durgapur 713 212 (West Bengal) Magdalla Works (NCCL), Magdalla Port,
Dumas Road, Surat, Gujarat 395 007 Ratnagiri Works (NCCL), MIDC Industrial
Estste, Zadgaon Block, Ratnagiri, Maharashtra 415 639 Arakkonam Cement Works, Chetteri Village, Jharsuguda Cement Works, Near Dhutra
railway station, |
DIRECTORS
|
Name : |
Mr. Kumar Mangalam Birla |
|
Designation : |
Director
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Name
: |
Mr. G.
M. Dave |
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Designation
: |
Director
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|
Name : |
Mrs. Rajashree Birla |
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Designation : |
Director
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Name : |
Mr. R C Bhargava |
|
Designation : |
Director
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|
Name : |
Mr. Yashwant M. Deosthalee |
|
Designation : |
Director
|
|
Address : |
1001, Prabhu Kutir, 15
Altamount Road, Mumbai – 400 026, Maharashtra |
|
Date of Birth/Age : |
6th September, 1946 |
|
Date of Appointment : |
24th August, 2000 |
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Name
: |
Mr. S Misra |
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Designation
: |
Managing Director |
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Name
: |
Mr. V T Moorthy |
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Designation
: |
Director |
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Name
: |
Mr. J
P Nayak |
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Designation
: |
Director
|
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Address : |
Gilder House, 67-F,Bhuleshwar Desai Road, Mumbai - 400 026,
Maharashtra |
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Date of Birth/Age : |
13th November, 1943 |
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Date of Appointment : |
24th August, 2000 |
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Name
: |
Mr. S Rajgopal |
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Designation
: |
Nominee (UTI) |
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Name
: |
Mr. D D Rathi |
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Designation
: |
Director |
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Address
: |
Flat No. 82, Jolly Maker
Apartments-II, Cuffe Parade, Mumbai – 400 005, Maharashtra |
|
Date
of Birth/Age : |
11th January, 1947 |
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Date
of Appointment : |
4th February, 2004 |
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Name
: |
Mr. S K Chatterjee |
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Designation
: |
Company Secretary |
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Name
: |
Mr. N J Jhaveri |
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Designation
: |
Additional Director |
KEY EXECUTIVE
|
Name
: |
Mr. K. C. Birla |
|
Designation
: |
Executive President and Chief Financial Officer |
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|
|
|
Name
: |
Mr. S. K. Maheshwari |
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Designation
: |
Chief Manufacturing Officer |
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Name
: |
Mr. O. P. Puranmalka |
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Designation
: |
Chief Marketing Officer |
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Name
: |
Mr. S. K. Chatterjee |
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Designation
: |
Company Secretary |
MAJOR SHAREHOLDERS
|
Names
of Shareholders |
No. of Shares |
Percentage of Holding |
|
Individuals / Hindu undivided
family |
800 |
0.0006 % |
|
Bodies corporate |
65,080,510 |
52.4702 % |
|
Mutual funds / UTI |
2,991,667 |
2.4120 % |
|
Financial institutions / banks |
34,971 |
0.0282 % |
|
Central government / state
government(s) |
79 |
0.0001 % |
|
Insurance companies |
7,372,420 |
5.9439 % |
|
|
|
|
|
Foreign institutional
investors |
10,199,579 |
8.2233 % |
|
Non-institutions |
|
|
|
Bodies corporate |
17,331,754 |
13.9735 % |
|
i. Individual shareholders
holding nominal share capital upto |
17,692,028 |
14.2639 % |
|
ii. Individual shareholders holding nominal share capital
in excess |
2,543,577 |
2.0507 % |
|
Any other (specify) |
|
|
|
Non-resident (REP) |
525,586 |
0.4237 % |
|
Non-resident (non-REP) |
207,790 |
0.1675 % |
|
Non-domestic Company |
737 |
0.0006 % |
|
Foreign nationals |
51839 |
0.0418 % |
|
Total |
124,033,337 |
100.000 % |
BUSINESS DETAILS
|
Line of Business : |
Manufacturers, Dealers and Sellers of Cement, Clinker, Lime,
Plasters, Whiting, Clax, Granule, Sand Coke, Fuel, Artificial Stone, Builders
requisites and Convenience of all kinds and any products or things which may
be manufactured out of or with cement or in which the use of cement may be
made. |
GENERAL
INFORMATION
|
No. of Employees : |
500 |
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Bankers : |
Not Available |
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Banking Relations : |
Good |
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Auditors : |
S B Billimoria and Company /G P
Kapadia and Company Chartered Accountants |
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|
|
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Associates/Subsidiaries : |
·
Narmada Cement Company Limited (NCCL) ·
Dakshin Cement Limited |
CAPITAL STRUCTURE
Authorised
Capital :
|
No.
of Shares |
Type |
Value |
Amount |
|
130000000 |
Equity
Shares |
Rs. 10/- |
Rs. 1300.000 millions |
Issued,
Subscribed & Paid-up Capital :
|
No.
of Shares |
Type |
Value |
Amount |
|
124485900 |
Equity
Shares |
Rs. 10/- |
Rs. 1244.859 millions |
FINANCIAL DATA
[all figures are in Rupees
Millions]
ABRIDGED
BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
1244.900 |
1244.000 |
1249.100 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
9137.800 |
9427.300 |
9505.400 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
10382.700 |
10671.300 |
10754.500 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
12219.300 |
12533.500 |
12450.100 |
|
|
2] Unsecured Loans |
2299.000 |
2780.300 |
3906.300 |
|
|
TOTAL BORROWING |
14518.300 |
15313.800 |
16356.400 |
|
|
DEFERRED TAX LIABILITIES |
|
|
|
|
|
|
|
|
|
|
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TOTAL |
24901.000 |
25985.100 |
27110.900 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
25371.700 |
25489.000 |
27279.000 |
|
|
Capital work-in-progress |
1410.300 |
481.800 |
240.600 |
|
|
|
|
|
|
|
|
INVESTMENT |
1723.900 |
1847.900 |
2380.900 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
3795.700
|
2837.100 |
2231.700 |
|
|
Sundry Debtors |
1725.500
|
1719.500 |
1775.700 |
|
|
Cash & Bank Balances |
616.000
|
562.600 |
418.300 |
|
|
Other Current Assets |
0.000
|
0.000 |
0.000 |
|
|
Loans & Advances |
1682.300
|
3388.600 |
3084.100 |
|
Total Current Assets |
7819.500
|
8507.800 |
7509.800 |
|
|
Less : CURRENT LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
11032.600
|
10102.700 |
10255.400 |
|
|
Provisions |
391.800
|
238.700 |
199.200 |
|
Total Current Liabilities |
11424.400
|
10341.400 |
10454.600 |
|
|
Net Current Assets |
[3604.900]
|
[1833.600] |
[2944.800] |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
155.200 |
|
|
|
|
|
|
|
|
TOTAL |
24901.000 |
25985.100 |
27110.900 |
|
PROFIT
& LOSS ACCOUNT
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Sales Turnover [including other income] |
38580.300 |
31025.500 |
27444.700 |
|
|
|
|
|
|
Profit/(Loss)
Before Tax |
2855.200 |
[336.200] |
492.000 |
|
Provision
for Taxation |
557.600 |
[364.700] |
103.700 |
|
Profit/(Loss)
After Tax |
2297.600 |
28.500 |
388.300 |
|
|
|
|
|
|
Total
Expenditure |
32668.400 |
28075.100 |
23657.400 |
QUARTERLY
RESULTS
|
PARTICULARS |
|
30.06.2006 |
30.09.2006 |
|
Sales Turnover |
|
11803.200 |
10045.400 |
|
Other Income |
|
134.000 |
119.000 |
|
Total Income |
|
11937.200 |
10164.400 |
|
Total Expenditure |
|
8057.400 |
7500.500 |
|
Operating Profit |
|
3879.800 |
2663.900 |
|
Interest |
|
225.900 |
237.400 |
|
Gross Profit |
|
3653.900 |
2426.500 |
|
Depreciation |
|
543.500 |
547.400 |
|
Tax |
|
1079.500 |
676.500 |
|
Reported PAT |
|
2108.400 |
1274.400 |
200606 Quarter 1 –
Expenditure Includes (Increase) / Decrease in Stock Rs
(99.00) million Raw Material Consumed Rs 909.00 million Purchases of Finished
Goods Rs 257.70 million Payment to and Provision for Employees Rs 275.00
million Power and Fuel Rs 2855.50 million Freight and Handling Expenses Rs
2455.40 million Other Expenditure Rs 1403.80 million Tax Includes Provision for
Current Tax Rs 1070.30 million Deferred Tax Rs (77.50) million Fringe Benefit
Tax Rs 9.20 million EPS is Basic and Diluted Status of Investor Complaints for
the quarter ended 30.06.2006 Complaints Pending at the beginning of the quarter
Nil Complaints Received during the quarter 05 Complaints disposed off during
the quarter 05 Complaints unresolved at the end of the quarter Nil 1. The Board
for Industrial and Financial Reconstruction (BIER), at its meeting, held on 15.05.2006
has approved the Scheme of Amalgamation (the Scheme) of Narmada Cement Company
Limited (NCCL) with the Company, with effect from 1.10.2005. In view of the
aforesaid amalgamation, the figures for the quarter ended 30.06.2006 are not
comparable with those of the corresponding quarter of the previous year. 2.
Pursuant to the Accounting Standard 15 (Revised) on 'Employee Benefits (AS-IS)
issued by the Institute of Chartered Accountants of India being mandatory With
effect from 01.04.2006, the. Company has debited an additional amount of Rs 3.8
million for the quarter ended 30.06.2006 in respect of provision for employee
benefits. The adjustments on account of transitional provisions will be dealt
with in the General Reserves at the year end. 3. The Company is engaged in one
primary segment viz. Cement Business- The Company's operations are solely
situated in India. 4. The figures or the previous year / period have been
regrouped wherever necessary. 5. The above results have been reviewed by Audit
Committee and thereafter approved by Board of Directors at the meeting held on
25.07.2006. The statutory auditors have performed a limited review of the
financial results for the quarter ended 30.06.2006.
200609 Quarter 2 –
Expenditure Includes (Increase) / Decrease in Stock Rs
(11.10) million Raw Material Consumed Rs 841.70 million Purchases of Finished
Goods Rs 241.60 million Payment to and Provision for Employees Rs 294.20
million Power and Fuel Rs 2484.80 million Freight and Handling Expenses Rs
2062.10 million Other Expenditure Rs 1587.20 million Tax Includes Provision for
Current Tax Rs 669.70 million Deferred Tax Rs (71.80) million Fringe Benefit
Tax Rs 6.80 million EPS is Basic and Diluted Status of Investor Complaints for
the quarter ended 30.09.2006 Complaints Pending at the beginning of the quarter
Nil Complaints Received during the quarter 07 Complaints disposed off during
the quarter 07 Complaints unresolved at the end of the quarter Nil 1. The Board
for Industrial and Financial Reconstruction (BIER), at its meeting, held on
15.05.2006 has approved the Scheme of Amalgamation (the Scheme) of Narmada
Cement Company Limited (NCCL) with the Company, with effect from 0110.2005. In
view of the aforesaid amalgamation, the figures for the three months and six months
ended 30.09.2006 are not comparable with those of the corresponding quarter of
the previous year. 2. Pursuant to the Accounting Standard 15 (Revised) on
'Employee Benefits (AS-15) issued by the Institute of Chartered Accountants of
India being mandatory With effect from 01.04.2006, the Company has debited an
additional amount of Rs. 0.1 Millions for three months Rs 3.90 million for the
six months ended 30.09.2006 in respect of provision for employee benefits. The
adjustments on account of transitional provisions will be dealt with in the
General Reserves at the year end. 3. The Company is engaged in one primary
segment viz. Cement Business- The Company's operations are solely situated in
India. 4. The figures or the previous year / period have been regrouped
wherever necessary. 5. The above results have been reviewed by Audit Committee
and thereafter approved by Board of Directors at the meeting held on 1610.2006.
The statutory auditors have performed a limited review of the financial results
for the quarter and six months ended 30.09.2006.
KEY
RATIOS
|
PARTICULARS |
31.03.2006 |
31.03.2005 |
31.03.2004 |
|
Debt-Equity Ratio |
1.42 |
1.48 |
1.52 |
|
Long Term Debt-Equity Ratio |
1.34 |
1.32 |
1.33 |
|
Current Ratio |
0.70 |
0.66 |
0.61 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
0.85 |
0.71 |
1.26 |
|
Inventory |
11.41 |
12.07 |
24.14 |
|
Debtors |
21.98 |
17.50 |
30.33 |
|
Interest Cover Ratio |
4.19 |
0.69 |
1.43 |
|
Operating Profit Margin(%) |
15.62 |
9.65 |
14.06 |
|
Profit Before Interest And Tax
Margin(%) |
9.91 |
2.40 |
6.10 |
|
Cash Profit Margin(%) |
11.78 |
7.35 |
9.41 |
|
Adjusted Net Profit Margin(%) |
6.07 |
0.09 |
1.44 |
|
Return On Capital Employed(%) |
14.75 |
2.77 |
12.17 |
|
Return On Net Worth(%) |
21.83 |
0.27 |
7.20 |
STOCK PRICES
|
Face
Value |
Rs.10/- |
|
High |
Rs.915.95/- |
|
Low |
Rs.906.25/- |
LOCAL AGENCY
FURTHER INFORMATION
Subject was incorporated as L and T Cement Limited now changed to
the present name with effect from 19th November, 2003.
History
UltraTech Cement Limited (Formely UltraTech Cemco Limited )is a subsidiary of Grasim Industries Limited, the flagship company of the Aditya Birla Group. UltraTech Cemco was formed to carry on the cement business hither to carried on by Larsen and Toubro. The cement division of L and T came to UltraTech Cemco effective from 24th August 2004. The company was incorporated in the year 2000.
Ultratech Cemco is the second largest in the Indian Cement industry by
capacity, with installed capacity of 15.5 million tonne on stand alone basis
and 17.0 million tonne, including 1.5 million tonne capacity of Narmada Cement
Company, in which it has 97.0% equity stake. On a consolidated basis, UltraTech
Cemco has 11.76% share of the All India large cement capacity of 144.54 million
tonne as of Mar'04.
The company produces Portland cement, Portland Blast Furnace slag cement,
Portland Pozzolana cement and Grey Portland cement. Ultratech has five
integrated plants, five grinding units and three terminals two in India and one
in Sri Lanka.
The subsidiaries of the company are Narmada Cement Company
Limited, Dakshin Cements Limited and UltraTech Ceylinco Private Limited.
UltraTech has very low capacity utilisation of 76.26% (excluding clinker
operations) while its subsidiary operates at 24.3%. Incidentally, Narmada
Cement company generated nearly 62% of revenues in FY 2002-03 from clinker and
only 38% from cement. Overall, the UltraTech group operated its 18.5 million
capacity at 71.7% levels (excluding clinker) in FY 2003-04. In contrast,
Gujarat Ambuja operated at 105.6%, Grasim operated at 88.7%, ACC at 91.3% in FY
2003-04. This evidences significant scope of improving capacity utilisation,
which can lead to scaling up of revenues, margins and profits. Also, once
Grasim gains management control, there will also be significant synergy
benefits, in terms of cross branding, cross marketing etc.
The cement division of the L and T has been demerged and transferred to
Ultratech effective from 24th August 2004. Accordingly, For every 10 shares of
Rs 10 each held in Larsen and Toubro (before demerger), the shareholders will
get (a) 5 shares of Rs 2 each of demerged L and T (residual entity) and 4
shares of Rs 10 each of UltraTech. L and T holds 20% stake in Ultratech as of
31st March 2004. However, as per the scheme of arrangement, the
company will divest 8.5% stake in Ultratech to Grasim Industries.
The demerger of cement division into Ultratech has become effective from
14th May 2004. The shares of Ultratech will be listed on the bourses
within 40 days from the above effective date. Meanwhile, Grasim has made open
offer to share holders of UltraTech to acquire 30% stake amounting to
3,73,19,587 equity shares of Rs 10 each of UltraTech for Rs 342.60 per share.
Grasim has already deposited the entire open offer consideration in an escrow
account. The open offer opens on 7th June 2004 and closes on 21st
June 2004.
The company has decided to merge Narmada Cement Company Limited (NCCL) with
itself with effect from 1st October 2005. According to the Scheme of
Merger, the shareholders of NCCL will be allotted 1 equity share of Rs.10/-
each of the company for every 18 equity share of Rs.10/- each held by them in
NCCL. The Scheme of Merger is subject to approval.
The name of the company has been changed from Ultratech Cemco Limited to
UltraTech Cement Limited with effect from 10th December 2004.
During 2004-05 the company has acquired 40 Millions shares in UltraTech
Ceylinco Private Limited From Larsen and Toubro Limited for value of Rs.230.3
Millions. Further the company has modernisized /replaced its existing assets at
an capital expenditure of Rs.688.5 Millions.
Financial Results:
(Rs. in Millions) 2005-06
Gross Turnover 3,7852.9 Gross Profit 5016.2 Less: Depreciation 2160.3 Profit
before Tax and Diminution 2855.9 Provision for diminution – 768.4 Profit/(Loss)
before Tax 2855.9 Tax expenses 558.3 Profit after Tax 2297.6 Add: Balance
brought forward from Previous Year 101.1 Surplus available for Appropriation
2398.7 Appropriation: Debenture Redemption Reserve 94.5 -General Reserve 250.0
-Proposed Dividend 217.9 Corporate Tax on Dividend 30.6 Balance transferred to
Balance Sheet 1805.7
(The accounts for the year under review include the performance of the
erstwhile Narmada Cement Company Limited (NCCL) for the period 1st October,
2005 to 31st March, 2006 and are therefore not comparable with the previous
years' figures)
For the year under review, the Company earned revenues of Rs.3,2994.5 millions
compared to Rs.2,6069.0 millions in the previous year. After providing for
Interest of Rs.896.4 Millions and Depreciation of Rs.2160.3 Millions , the
Profit before Tax stood at Rs.2855.9 Millions. Profit before tax and provision
for diminution in value of investments Rs. NIL stood at Rs.2855.9 Millions.
Profit after tax stood at Rs.2297.6 Millions.
Review Of Operations:
During the year under review, the Company's aggregate sales volumes recorded a
growth of 2.5%, increasing from 15.17 MMT in the previous year to 15.55 MMT.
Realisation was also up by 23.50%. The exports mix saw a rising share of
cement, which constitutes 57% of exports.
Lower clinker exports and extended shutdowns at the Company's plants have
resulted in lower effective capacity utilisation at 89% compared to 91% during
the previous year. Unprecedented floods in Maharashtra and Gujarat, which
constitute around 50% of the Company's domestic market, constrained the
performance of the Company during the second quarter of the year under
review.
Increase in power and freight costs also had an adverse impact on the operating
costs at the Company's plants.
To address the issue of increasing power costs, the Directors have approved the
setting up of captive thermal power plants at the Company's Units in Kovaya
(Gujarat) and Hirmi (Chhattisgarh). These are expected to be commissioned by
March, 2008. Once commissioned, these power plants will lead to reduced power cost.
To optimise freight costs, the Company continuously revisits its despatch mix
off rail, road and water ways.
Corporate Governance:
A separate section on Corporate Governance, in line with Clause 49 of the
Listing Agreement with the stock exchanges, forms a part of this Report. The
relevant Certificate dated 12th July, 2006 from the Company's Statutory Auditor
is annexed and forms part of this Report.
Subsidiary Companies:
In terms of Section 212 of the Companies Act, 1956, the Accounts along with the
Report of Directors and the Auditors' Report of the Company's subsidiaries viz.
Dakshin Cements Limited (Dakshin) and UltraTech Ceylinco (Private) Limited
(UltraTech Ceylinco) are annexed to this Report.
In keeping with the provisions of Accounting Standard 21 (AS-21) and Clause 32
of the Listing Agreement, the duly audited Consolidated Financial Statements
have been prepared after considering the financial statements of the Company's
subsidiaries viz. NCCL (for the period 1st April, 2005 to 30th
September, 2005), Dakshin and UltraTech Ceylinco.
Management Discussion And
Analysis:
Overview:
The Cement Industry is a part of the Construction Sector, which represents 6%
of the country's GDP. The Construction Sector is growing at 15% p.a. and
attracts 40% of the overall investment in the economy.
The Cement Sector is, consequently, showing signs of growing at a faster rate
than the 8% CAGR recorded over the past 2 decades. The principal demand drivers
have been housing, roads and government expenditure. It is expected that
renewed corporate investment in capacity creation and government spending on
infrastructure will likely accelerate the demand for cement. The per capita
consumption of cement in India is just 125 kgs, which is modest when compared
to neighbouring countries in East Asia. For instance, the comparable figure is
- 366 kgs in Thailand, 606 kgs in Malaysia, 626 kgs in China and as much as
1,216 kgs in South Korea.
The medium term prospects for the Cement Sector in India are satisfactory, as
demand and supply are expected to be in balance, with another 2 years before
the next cycle of new capacity enters the market. However, the industry is
vulnerable to volatility in energy prices as this represents nearly two-thirds
of the total cost of operations, including logistics. The position is
aggravated by a growing shortfall on supplies of indigenous coal against
linkages, the rising price of imported fuels, and the short term impact of
restrictions imposed on the loads traditionally carried by trucks.
The Company has a capacity of 17 million tpa comprising 5 integrated Cement
Plants, supported by 5 Grinding Units and 3 Terminals, one of which is located
in Sri Lanka. The Company has focused on improving Plant productivity as a means
of mitigating inflationary pressures. It has also endeavoured to address
escalating power costs by investing in Captive Thermal Power Plants at its 2
major Plants in Kovaya, (Gujarat) and Hirmi, (Chattisgarh); introduction of
alternative fuels; greater reliance on rail and sea transport and an expected
reduction in the average lead distance to markets.
Business and Financial Performance Review:
Merger of subsidiary:
A Scheme of Amalgamation of Narmada Cement Company Limited (NCCL) with the Company
was approved by the Board for Industrial and Financial Reconstruction (BIFR) at
its hearing held on 15th May, 2006. Pursuant to the BIFR Order, NCCL
stands amalgamated with the Company with effect from 1st October,
2005 (the Appointed Date). The Effective Date of the Scheme is 1st
June, 2006. NCCL is now a Division of the Company. NCCL's results are
incorporated in the accounts of the Company for the period from 1st
October, 2005 to 31st March, 2006 and hence the current year's
results are not strictly comparable with those of the previous year.
UltraTech Cement
Limited, makers of premier cement, is a subsidiary of Grasim Industries
Limited, the flagship company of the Aditya Birla Group. The group is the
eleventh largest cement manufacturer in the world and number one in India. Its
basket of products includes ordinary Portland cement, Portland blast furnace
slag cement, Portland Pozzolana cement and Grey Portland cement. It also
exports clinker and cement.
UltraTech has five
integrated plants, five grinding units, and three terminals — two in India and
one in Sri Lanka. All the plants have ISO 9001 certification. Most of the
plants have also been certified for ISO 14001 and OSHAS 18001.
UltraTech is the
country's largest exporter of cement clinker. The company exports over 2.5
million tonnes per annum, which is about 30 per cent of the country's total
clinker exports. The export market comprises of countries around the Indian
Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's
strategy for growth.
The cement division
of L and T was demerged in 2004 after Grasim made the 30 per cent open offer
for equity shares, gaining control over the new company, christened UltraTech.
Besides the long term strategic value in the wake of rising demand for cement,
with the growth of housing and infrastructure sectors in the country, the
acquisition brings significant synergy gains to the parent company. Narmada
Cement Company Limited, a subsidiary, was amalgamated with UltraTech in May 2006.
Details of UltraTech's production capacities
|
A |
Composite
integrated plants |
|
|
|
|
Andhra
Pradesh Cement Works |
8000 |
2.3 |
|
|
Awarpur
Cement Works |
9500 |
3.3 |
|
|
Gujarat
Cement Works |
15000 |
5.3 |
|
|
Hirmi
Cement Works |
8050 |
1.6 |
|
|
Narmada
Cement — Jafrabad Works |
4350 |
0.4 |
|
B |
Grinding
units |
|
|
|
|
Arakkonam
Cement Works |
|
1.2 |
|
|
Jharsuguda
Cement Works |
|
0.8 |
|
|
Narmada
Cement — Ratnagiri Works |
|
0.4 |
|
|
Narmada
Cement — Magdala Works |
|
0.7 |
|
|
West
Bengal Cement Works |
|
1.0 |
|
|
Total |
|
17.0 |
As part of the eighth biggest cement manufacturer in the world,
UltraTech Cement has five integrated plants, five grinding units as well as
three terminals of its own (one overseas, in Colombo, Sri Lanka). These
facilities gradually came up over the years, as indicated below:
2006 : Narmada Cement Company Limited amalgamated with
UltraTech pursuant to a Scheme of Amalgamation being approved by the Board for
Industrial and Financial Reconstruction (BIFR) in terms of the provision of
Sick Industrial Companies Act (Special Provisions)
2004 : Completion of the implementation process to
demerge the cement business of L and T and completion of open offer by Grasim,
with the latter acquiring controlling stake in the newly formed company
UltraTech
2003 : The board of Larsen and Toubro Limited (L and T)
decides to demerge its cement business into a separate cement company (CemCo).
Grasim decides to acquire an 8.5 per cent equity stake from L and T and then
make an open offer for 30 per cent of the equity of CemCo, to acquire
management control of the company.
2002 : The Grasim
Board approves an open offer for purchase of up to 20 per cent of the equity
shares of Larsen and Toubro Limited (L and T), in accordance with the
provisions and guidelines issued by the Securities and Exchange Board of India
(SEBI) Regulations, 1997.
Grasim increases its stake in L and T to 14.15 per cent
Arakkonam grinding unit
2001 :Grasim
acquires 10 per cent stake in L and T. Subsequently increases stake to 15.3 per
cent by October 2002
Durgapur grinding unit
1998-2000 :Bulk cement terminals at Mangalore, Navi Mumbai
and Colombo
1999 : Narmada Cement Company Limited acquired
Ratnagiri Cement Works
1998 : Gujarat Cement Works Plant II
Andhra Pradesh Cement Works
1996 : Gujarat Cement Works Plant I
1993 : Jharsuguda grinding unit
1987 : Awarpur Cement Works Plant II
1983 : Awarpur Cement Works Plant I
UltraTech is India's largest exporter of cement clinker. The company's production facilities are spread across five integrated plants, five grinding units, and three terminals — two in India and one in Sri Lanka. All the plants have ISO 9001 certification, and all but one have ISO 14001 certification. While two of the plants have already received OSHAS 18001 certification, the process is underway for the remaining three. The company exports over 2.5 million tonnes per annum, which is about 30 per cent of the country's total exports. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company's strategy for growth.
UltraTech's products include Ordinary Portland cement, Portland Pozzolana cement and Portland blast furnace slag cement.
v Ordinary Portland Cement
v Portland Blast Furnace Slag Cement
v Portland Pozzolana Cement
v Cement to European and Sri Lankan norms
Ordinary Portland cement
Ordinary portland cement is the most commonly used
cement for a wide range of applications. These applications cover dry-lean
mixes, general-purpose ready-mixes, and even high strength pre-cast and
pre-stressed concrete.
Portland blast furnace slag cement
Portland blast-furnace slag cement contains up to 70
per cent of finely ground, granulated blast-furnace slag, a nonmetallic product
consisting essentially of silicates and alumino-silicates of calcium. Slag
brings with it the advantage of the energy invested in the slag making.
Grinding slag for cement replacement takes only 25 per cent of the energy
needed to manufacture portland cement. Using slag cement to replace a portion
of portland cement in a concrete mixture is a useful method to make concrete
better and more consistent. Portland blast-furnace slag cement has a lighter
colour, better concrete workability, easier finishability, higher compressive
and flexural strength, lower permeability, improved resistance to aggressive
chemicals and more consistent plastic and hardened consistency.
Portland Pozzolana cement
Portland pozzolana cement is ordinary portland cement blended with
pozzolanic materials (power-station fly ash, burnt clays, ash from burnt plant
material or silicious earths), either together or separately. Portland clinker
is ground with gypsum and pozzolanic materials which, though they do not have
cementing properties in themselves, combine chemically with portland cement in
the presence of water to form extra strong cementing material which resists wet
cracking, thermal cracking and has a high degree of cohesion and workability in
concrete and mortar.
press
clipping
6th July, 2004
L
and T completes cement restructuring; Grasim acquires majority stake in
UltraTech.
Larsen and Toubro Limited (L and T) and Grasim Industries Limited
(Grasim) today announced that the implementation process of the demerger of the
cement division of L and T has been completed, and Grasim has acquired majority
stake in UltraTech CemCo Limited (UltraTech), the demerged cement business of L
and T.
The scheme of arrangement for the demerger of the cement business,
sanctioned by the Honorable High Court of Bombay, became effective from Friday,
14 May, 2004. Accordingly, the cement business undertaking was transferred to
and vested in UltraTech CemCo Limited.
Grasim had made a successful open offer bid for 30 per cent of the
equity of UltraTech with a view of taking management control. Concurrently,
Grasim acquired 8.5 per cent equity stake of UltraTech from L and T, and Grasim
and its associates have sold 14.95 per cent of their holding in the demerged L
and T to the L and T Employee Welfare Foundation.
Speaking on the occasion, Mr. A.M. Naik, Chairman and Managing
Director, L and T, said " This transaction, one of the biggest in
corporate India, has helped to unlock value for its shareholders and position
the demerged L and T as a more focused engineering and construction Company"
Says Mr. Kumar Mangalam Birla, Chairman, The Aditya Birla Group,
"This transaction reflects our commitment to build a leadership position
in cement. We believe that it will take about two to three years for UltraTech
to provide a competitive return on the aggressive price offered to its
shareholders."
New Management of Company
The company carved out of Larsen and Toubro’s demerged cement
business and now part of the Aditya Birla Group, on Tuesday constituted a new
management team.
Rajashree Birla, Kumar Mangalam Birla, Saurabh Mishra and D. D.
Rathi are part of the new management team from the Aditya Birla grouop. The
nominees of the financial institutions includes S. Rajagopalan and S. Khare,
while Y. S. Deosthale and J. P. Nayak are from L and T.
Mr. R. C. Bhargava and Mr. Arun Gandhi are the two independent
nominees.
Under the new shareholding pattern, AV Birla Group flagship Grasim
holds a majority 51% equity in Ultra Tech, while the balance is with the FIs
(12%), L and T (11.50%) and 25.50% with the employees and other public
shareholders.
The company’s share is to be listed shortly on the bourses.
Going forward, the Aditya Birla Group plans to phase out the L and
T brand by the end of current fiscal 2004-05.
The group is expecting Rs. 1000 millions savings for both Grasim
as well as Ultra Tech on account of synergies in the cement business.
Talking about the business, Birla said” the first quarter
dispatches had been disappointing. They expect a pick-up post-monsoon.
The transaction is expected to provide UltraTech an opportunity to
leverage synergies with Grasim and strengthen their ability to compete in the
Indian and overseas markets.
Contacts for specific queries
For general comments or queries relating to UltraTech, write to skchatterjee@adityabirla.com
For UltraTech share related queries, write to sharesutcl@adityabirla.com
For comments or queries relating to UltraTech investor relations,
write to jbajaj@adityabirla.com
For comments or queries relating to Group investor relations,
write to investorrelations@adityabirla.com
Visit http://careers.adityabirla.com
for information on career opportunities at Aditya Birla Group
For comments or queries relating to the Group management trainee
scheme, write to
For comments or queries relating to the media, write to pragnyaram@adityabirla.com
CMT REPORT [Corruption, Money
laundering & Terrorism]
The Public
Notice information has been collected from various sources including but not
limited to: The Courts, India Prisons Service, Interpol, etc.
1] INFORMATION
ON DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court
Declaration :
No records exist to suggest that subject is or was the subject of any
formal or informal allegations, prosecutions or other official proceeding for
making any prohibited payments or other improper payments to government
officials for engaging in prohibited transactions or with designated parties.
3] Asset
Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record
on Financial Crime :
Charges or conviction registered
against subject: None
5] Records
on Violation of Anti-Corruption Laws :
Charges or investigation registered
against subject: None
6] Records
on Int’l Anti-Money Laundering Laws/Standards :
Charges or investigation registered
against subject: None
7] Criminal
Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation
with Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation
Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA
INFORM as part of its Due Diligence do provide comments on Corporate Governance
to identify management and governance. These factors often have been predictive
and in some cases have created vulnerabilities to credit deterioration.
Our
Governance Assessment focuses principally on the interactions between a
company’s management, its Board of Directors, Shareholders and other financial
stakeholders.
CONTRAVENTION
Subject
is not known to have contravened any existing local laws, regulations or
policies that prohibit, restrict or otherwise affect the terms and conditions
that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US
Dollar |
1 |
Rs.44.86 |
|
UK
Pound |
1 |
Rs.84.97 |
|
Euro |
1 |
Rs.57.59 |
SCORE &
RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
NO |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
72 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit
history (10%) Market
trend (10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial
base with the strongest capability for timely payment of interest and
principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No
caution needed for credit transaction. It has above average (strong)
capability for payment of interest and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are
regarded healthy. General unfavourable factors will not cause fatal effect.
Satisfactory capability for payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal.
Capable to meet normal commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors
carry similar weight in credit consideration. Capability to overcome
financial difficulties seems comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of
interest and principal sums in default or expected to be in default upon
maturity |
Limited with full security |
|
<10 |
C |
Absolute credit risk exists. Caution
needed to be exercised |
Credit not recommended |
|
NR |
In view of the lack of information, we
have no basis upon which to recommend credit dealings |
No Rating |
|