UltraTech Cement, India’s largest cement maker, will take 3-4 years to turn around the assets acquired from the Jaypee group.
At the 17th annual general meeting of UltraTech on Tuesday, Chairman of Aditya Birla Group
Kumar Mangalam Birla said, “We need to turnaround the Jaypee plants. It is where opportunity lies, as there is great value creation potential. The company will work towards increasing capacity utilisation and optimising power costs. That’s the focus of our team now. We may take 3-4 years to turnaround these assets.”
The Birla firm had completed the acquisition in June. The Rs 16,189-crore deal was for Jaiprakash Associates’ 21.2-mt cement plants.
“It was one of the largest deals in India. We need to digest it now. The company also has to start selling Jaypee cements under the UltraTech brand umbrella and take various other cost optimisation measures so that cash flow starts from these assets,” added Birla.
The Jaypee deal had catapulted UltraTech to a stronger position against its closest competitor, LafargeHolcim, which operates in India through Ambuja Cements
With UltraTech’s share price surpassing Rs 4,000, shareholders asked Birla if the company would split shares to increase liquidity. But he replied there was no such plan. UltraTech shares closed at Rs 4,315.05 on the BSE on Tuesday, losing 0.7 per cent.
UltraTech posted a strong set of quarterly numbers for April-June 2017. Its net profit rose 15 per cent to Rs 897 crore, against Rs 780 crore in the previous corresponding quarter. The company's net sales grew 6.1 per cent to Rs 6,938 crore, against Rs 6,535 crore in the year-ago period. The company announced a dividend of Rs 10 a share.