UltraTech Cement's net profit nearly doubled to Rs 617 crore (Rs 319 crore) in the third quarter of this fiscal on the back of better realisation and lower base last year, the company said. Net sales increased by 23 per cent to Rs 4,572 crore (Rs 3,715 crore).
The combined domestic cement and clinker sales was up 6 per cent at 9.72 million tonnes (9.16 mt) while it was at 2.49 lakh tonnes (2.25 lt) for white cement and wall-care putty.
Mr K.C. Birla, Senior Executive President and Chief Financial Officer, said cement demand in the December quarter improved by 10 per cent against 2.6 per cent in the year-ago quarter.
The company's raw material cost in the December quarter rose by 21 per cent to Rs 608 crore (Rs 503 crore), while power and freight expense shot up 24 per cent to Rs 1,119 crore (Rs 900 crore). The freight bill was up 15 per cent at Rs 840 crore (Rs 728 crore).
The cost pressure is expected to continue even as international coal prices, of late, have come down marginally. “The new pricing policy of Coal India will more than offset the benefit of rupee appreciation and marginal fall in global coal prices,” he said.
Imported coal prices have gone up to $129 a tonne in the December quarter from $124 in corresponding quarter last year. The company imports 40 per cent of its coal requirement.
Govt spending boost
Pick-up in demand has also helped the cement company to ramp up capacity utilisation to 73 per cent as compared to 68 per cent in the September quarter. The company's realisation improved by 18 per cent to Rs 195 for a 50-kg bag.
“Cement sales improved in the northern and western region driven by Government spending in infrastructure projects. We expect a demand growth of 8 per cent in the March quarter,” said Mr Birla. Though a portion of cost increase will be passed on to end users, the pressure on profit margins will continue, he added.