Fresh demand for cement seen improving in FY21: Atul Daga of Ultratech

In a Q&A, the CFO of the firm says he sees a spike in costs as it looks to spend on marketing, advertising and branding in the coming months

With strong September quarter performance, Ultratech Cement Ltd is ready for spending on marketing, branding and advertising, a cost head it had shut in the quarter. Atul Daga, chief financial officer of the company, tells Aditi Divekar about the fresh demand expected in the sector in the coming months and companies plans to capture it.

Edited excerpts

The September quarter is seasonally weak for cement, yet the topline was strong. Do you think, this was a pent up demand? Do you see demand sustaining through FY21?

Demand will not just sustain, but is also seen improving in remaining part of FY21. Fresh demand is largely expected from rural regions of the eastern and central parts of India and both rural and urban parts of northern part of the country. Pent up demand for cement had exhausted in July. There is only fresh demand now. Very strong government spend on infrastructure projects supported the sector in September quarter.

Ultratech curtailed costs significantly in the September quarter. Do you plan to further curtail your costs in FY21?

No. It is not possible to curtail costs further. We curtailed cost overhead by 14 per cent in September quarter but for entire FY21, the cost curtailment would stand at 10 per cent. We see 4 per cent costs coming back as we look to spend on marketing, advertising and branding in coming months.

Has there been any change in hiring strategy, salary hikes of employees during the pandemic?

Fresh hiring usually happens at our end when there is capacity expansion. Since there was no new plant put up, we have not had fresh hiring. As far as replacement hiring goes, it is being done if and where needed. And with regard to salary hikes. There is no hike in FY21 for employees but we will be disbursing bonus for FY20, which is due in FY21 in coming months. But there is no hike this year.

Has the gloom business market due to the ongoing pandemic led to Ultratech eyeing any acquisitions?

Currently, there is nothing on board. But certainly we are interested in units or facilities which would give the company incremental market share and help strengthen the network of existing 54 plants across country.