UltraTech Cement Ltd:Annual Report 2023-24 Analysis

Ultratech Cement Ltd.: A Comprehensive Overview #

About Ultratech Cement Ltd. #

Year of Establishment and Founding History:

• Incorporated in 2000 as a demerger from L&T Cement.

Headquarters Location and Global Presence:

• Headquarters: Mumbai, India.
• Global Presence: Operates in India, UAE, Bahrain, Bangladesh and Sri Lanka.

Company Vision and Mission:

• Vision: “To be the ‘Leader’ in Building Solutions.”
• Mission: The mission is centered around creating superior value for stakeholders through sustained growth, innovation, and operational excellence while adhering to the highest ethical standards.

Key Milestones in Their Growth Journey:

• 2004: Acquisition of Raymond Cement’s Gujarat Cement Unit
• 2010: Acquired ETA Star Cement in UAE
• 2013: Acquired Gujarat based cement plant of Jaypee Cement.
• 2014: Acquisition of assets of Jaiprakash Associates Limited.
• 2017: Acquisition of Binani Cement
• 2018: Acquisition of Century Textiles cement assets.
• 2024: Approved acquisition of Kesoram Cement

Stock Exchange Listing Details and Market Capitalization:

• Listed on: National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE)
• Market Capitalization: Subject to change based on market conditions. (Please refer to current financial data sources for the latest figures).

Recent Financial Performance Highlights:

• (Refer to recent annual reports and financial statements for detailed information. Key metrics to include: Revenue, Profit After Tax (PAT), EBITDA, Debt levels, and Growth Rate).

Management Team and Leadership Structure:

• Chairman: Kumar Mangalam Birla
• Managing Director: K. C. Jhanwar

Notable Awards or Recognitions:

• Ultratech has received awards for its sustainable practices, energy efficiency, and contributions to the construction industry. (Refer to Ultratech’s official website or annual reports for detailed listings).

Their Products #

Complete Product Portfolio with Categories:

• Grey Cement: Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC)
• White Cement: Birla White Cement
• Ready Mix Concrete (RMC): Ultratech Concrete
• Building Products: Tile Adhesives, Waterproofing Solutions, Grouts, Plaster, Autoclaved Aerated Concrete (AAC) Blocks

Flagship or Signature Product Lines:

• Ultratech Cement (Grey Cement - PPC is widely popular)
• Birla White Cement
• Ultratech Concrete (RMC)

Key Technological Innovations or Patents:

• Ultratech focuses on improving cement strength, durability, and sustainability through its R&D efforts. Specific patent details would require examination of their filings.

Manufacturing Facilities and Production Capacity:

• Extensive network of integrated cement plants, grinding units, and bulk terminals across India and other operating countries.
• Total Production Capacity: Among the largest cement producers globally. (Refer to the latest annual reports or investor presentations for specific figures).

Quality Certifications and Standards:

• ISO 9001:2015 (Quality Management System)
• ISO 14001:2015 (Environmental Management System)
• OHSAS 18001:2007 (Occupational Health and Safety Management System)
• BIS Certification for various cement grades.

Any Unique Selling Propositions or Technological Advantages:

• Wide distribution network, ensuring product availability.
• Strong brand reputation and customer trust.
• Focus on sustainable manufacturing practices.
• Research and Development driving product innovation.

Recent Product Launches or R&D Initiatives:

• (Refer to Ultratech’s website and press releases for the most recent product launches and research and development initiatives. Examples include new concrete mixes, eco-friendly cement options and improved tile adhesives).

Primary Customers #

Target Industries and Sectors:

• Infrastructure development (roads, bridges, dams)
• Residential construction
• Commercial construction
• Industrial construction
• Housing projects
• Government projects
• Real estate developers

Geographic Markets (Domestic vs. International):

• Dominantly India.
• Presence in UAE, Bahrain, Bangladesh and Sri Lanka.

Major Client Segments:

• Individual Home Builders (IHB)
• Contractors
• Real Estate Developers
• Government Agencies
• Industrial Clients

Distribution Network and Sales Channels:

• Extensive network of dealers and retailers across India.
• Direct sales to large infrastructure projects and institutional clients.
• Online sales platform.

Major Competitors #

Direct Competitors in India and Globally:

• India: Ambuja Cements, ACC Limited, Shree Cement, Dalmia Bharat Cement.
• Globally: LafargeHolcim, HeidelbergCement, Cemex.

Comparative Market Share Analysis:

• Ultratech Cement holds a significant market share in the Indian cement industry. (Refer to industry reports from credible sources for detailed market share data).

Competitive Advantages and Disadvantages:

• Advantages: Large scale of operations, wide distribution network, strong brand reputation, focus on innovation.
• Disadvantages: Susceptibility to economic cycles, dependence on raw material availability, price volatility, environmental regulations.

How they Differentiate from Competitors:

• Premium product quality and consistency.
• Extensive product portfolio catering to diverse needs.
• Strong focus on customer service and technical support.
• Sustainability initiatives and responsible manufacturing practices.

Industry Challenges and Opportunities:

• Challenges: Fluctuating raw material prices, increasing energy costs, stringent environmental regulations, cyclical demand, intense competition.
• Opportunities: Government infrastructure spending, affordable housing initiatives, urbanization, growing demand for green building materials.

Market Positioning Strategy:

• Ultratech aims to be a market leader by providing high-quality products, innovative solutions, and excellent customer service. They position themselves as a reliable and sustainable partner for construction needs.

Future Outlook #

Expansion Plans or Growth Strategy:

• Focus on increasing capacity utilization and operational efficiency.
• Expanding into new markets and geographies.
• Strategic acquisitions to strengthen market position.
• Investing in research and development to develop innovative products.

Upcoming Products or Innovations:

• (Refer to Ultratech’s announcements for information about new product development. Expect continued focus on eco-friendly cement options, advanced concrete mixes, and digital solutions for construction).

Sustainability Initiatives or ESG Commitments:

• Reducing carbon footprint through investments in renewable energy and alternative fuels.
• Water conservation and waste management initiatives.
• Promoting sustainable construction practices.
• Focus on community development and social responsibility.

Industry Trends Affecting Their Business:

• Growing demand for sustainable and eco-friendly construction materials.
• Increased adoption of digital technologies in the construction industry.
• Government focus on infrastructure development and affordable housing.
• Rising urbanization and population growth.

Long-Term Vision and Strategic Goals:

• To be the leading provider of building solutions in India and beyond.
• To create sustainable value for all stakeholders through innovation, operational excellence, and responsible business practices.
• To be a trusted and respected brand known for its quality, reliability, and commitment to sustainability.

## UltraTech Cement Limited - Financial Analysis Report FY 2023-24

### 3-Year Financial Trend Analysis (Consolidated)

*   **FY 2023-24 Performance:** Consolidated Net Turnover reached ₹69,810 crores (up 12% YoY), Consolidated EBITDA at ₹13,586 crores (up 22% YoY). Consolidated Profit After Tax increased by 38% YoY to ₹7,005 crores. Growth driven by a 13% increase in consolidated sales volume and improved operational efficiency (lower energy costs), partially offset by lower price realization. Basic EPS (Consolidated) stood at ₹242.73.
*   **FY 2022-23 Performance (Restated):** Consolidated Net Turnover was ₹62,338 crores with EBITDA at ₹11,123 crores. Consolidated Profit After Tax was ₹5,064 crores. Standalone RoCE was 12%.
*   **FY 2021-22 Performance (Standalone proxy):** Standalone Revenue was ₹50,991 crores, Standalone EBITDA was ₹11,197 crores, and Standalone PAT was ₹7,077 crores (Included tax gain). Standalone RoCE was 14%.
*   **Balance Sheet Strength:** Net Debt to EBITDA ratio at 0.2x, indicating strong financial resilience and capacity for funding future expansion through internal accruals despite significant capital expenditure (approx. ₹9,000 crores in FY24).

### Business Segment Performance

*   UltraTech operates exclusively within the **Cement and Cement Related Products** business (Ind AS 108, Note 39). It is identified as a single reportable segment.

### Major Strategic Initiatives and Progress

#### Capacity Expansion

*   Target: 200 MTPA.
*   Reached 150+ MTPA global capacity in April 2024.
*   Added 13.81 MTPA in FY24 and 8.7 MTPA in early FY25 (total 22.51 MTPA, including 1.64 MTPA acquisition).
*   Ongoing projects to add another 34 MTPA across 16 locations.
*   Proposed acquisition of Kesoram Cement (10.75 MTPA) is progressing (CCI approval received).
*   Planned capex of ₹32,400 crores over the next three years.

#### Cost Competitiveness

*   Focus on achieving lowest production cost in micro-markets, aided by lower energy costs in FY24. EBITDA/tonne (India Operations) improved.

#### Sustainability Leadership

##### Decarbonisation

*   Committed to Net Zero by 2050.
*   Achieved 12% reduction in Scope 1 CO2 intensity (vs 2017 baseline). FY24 Net Scope 1: 556 kg CO2/t cementitious.
*   Piloting kiln electrification (Coolbrook partnership).

##### Energy Transition

*   EP100 commitment met ahead of schedule.
*   Progressing on RE100 (target 100% renewable electricity by 2050).
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Detailed Analysis #

## Financial Position: UltraTech Cement Limited Analysis (FY22-FY24)

### Balance Sheet Analysis (Standalone)

#### Assets (Standalone)

| Particulars (` in Crores)        | As at Mar 31, 2024 | As at Mar 31, 2023 (Restated) | As at Mar 31, 2022 |
| :------------------------------- | :----------------- | :---------------------------- | :----------------- |
| **Non-Current Assets**           |                    |                               |                    |
| Net Fixed Assets (incl. ROU, CWIP) | 75,942.45          | 66,856.04                     | 57,849.77          |
| Investments (Subs, Assoc)        | 2,282.18           | 3,460.57                      | 8,668.20           |
| Other Financial Assets           | 1,624.07           | 1,418.60                      | 1,464.26           |
| Income Tax Assets (Net)          | 353.22             | 480.69                        | 548.69             |
| Other Non-Current Assets         | 3,578.95           | 3,404.79                      | 2,849.73           |
| **Total Non-Current Assets**     | **83,780.87**      | **75,620.69**                 | **71,380.65**      |
| **Current Assets**               |                    |                               |                    |
| Inventories                      | 8,570.87           | 6,927.05                      | 6,078.76           |
| Liquid Investments               | 7,628.10           | 6,371.63                      | 6,856.08           |
| Trade Receivables                | 3,496.54           | 3,242.17                      | 2,812.63           |
| Cash & Cash Equivalents          | 253.92             | 1,027.78                      | 1,132.89           |
| Bank Balances (Other)            | 238.22             | 231.03                        | 102.31             |
| Loans                            | 18.11              | 17.33                         | 16.08              |
| Other Financial Assets           | 1,663.71           | 1,358.48                      | 1,648.78           |
| Other Current Assets             | 1,354.54           | 1,185.29                      | 880.98             |
| **Total Current Assets**         | **23,224.01**      | **20,360.76**                 | **19,528.51**      |
| **Total Assets**                 | **107,004.88**     | **95,981.45**                 | **90,909.16**      |

#### Liabilities & Equity (Standalone)

| Particulars (` in Crores)        | As at Mar 31, 2024 | As at Mar 31, 2023 (Restated) | As at Mar 31, 2022 |
| :------------------------------- | :----------------- | :---------------------------- | :----------------- |
| **Equity**                       |                    |                               |                    |
| Equity Share Capital             | 288.69             | 288.69                        | 288.67             |
| Other Equity                     | 58,718.42          | 53,297.10                     | 48,760.44          |
| **Total Equity (Net Worth)**     | **59,007.11**      | **53,585.79**                 | **49,049.11**      |
| **Liabilities**                  |                    |                               |                    |
| **Non-Current Liabilities**      |                    |                               |                    |
| Borrowings                       | 4,141.80           | 4,450.64                      | 5,071.78           |
| Lease Liabilities                | 921.50             | 942.48                        | 952.47             |
| Other Financial Liabilities      | 42.42              | 37.65                         | 53.30              |
| Provisions                       | 168.00             | 146.33                        | 158.21             |
| Deferred Tax Liabilities (Net)   | 6,627.73           | 6,414.79                      | 5,751.41           |
| Other Non-Current Liabilities    | 261.09             | 177.50                        | 124.73             |
| **Total Non-Current Liabilities**| **12,162.54**      | **12,169.39**                 | **12,112.00**      |
| **Current Liabilities**          |                    |                               |                    |
| Borrowings                       | 3,856.80           | 4,075.57                      | 5,016.45           |
| Lease Liabilities                | 128.71             | 124.49                        | 125.02             |
| Trade Payables                   | 8,115.97           | 6,751.74                      | 7,146.99           |
| Other Financial Liabilities      | 5,077.19           | 4,327.29                      | 4,460.93           |
| Other Current Liabilities        | 5,958.22           | 5,590.41                      | 4,913.02           |
| Provisions                       | 1,337.58           | 1,228.79                      | 1,263.26           |
| Current Tax Liabilities (Net)    | 1,360.76           | 137.98                        | 8,822.38           |
| **Total Current Liabilities**    | **25,835.23**      | **22,236.27**                 | **31,748.05**      |
| **Total Liabilities**            | **37,997.77**      | **34,405.66**                 | **43,860.05**      |
| **Total Equity and Liabilities** | **97,004.88**      | **87,991.45**                 | **92,909.16**      |

*Note: Minor discrepancies may exist due to rounding in the source document.*

### Significant YoY Changes (FY24 vs FY23 Restated)

| Line Item                          | FY24 (` Cr) | FY23 (` Cr) | Change (%) | Reason (from MD&A/Highlights)                          |
| :--------------------------------- | :---------- | :---------- | :--------- | :----------------------------------------------------- |
| Capital Work-in-Progress         | 6,090.43    | 3,754.82    | 62.2%      | Ongoing capacity expansion projects.                 |
| Inventories                        | 8,570.87    | 6,927.05    | 23.7%      | Increase in fuel inventory and higher sales volumes. |
| Liquid Investments                 | 7,628.10    | 6,371.63    | 19.7%      | Deployment of surplus funds.                         |
| Cash & Cash Equivalents            | 253.92      | 1,027.78    | -75.3%     |                                                        |
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UltraTech Cement Limited (ULTRACEMCO) FY24 Financial Analysis #

Revenue Analysis #

• Consolidated Performance: Net Turnover for FY24 stood at ₹69,810 crores, marking a 12.3% increase from ₹62,990 crores (restated) in FY23. Consolidated sales volume grew by 13% year-over-year.
• Standalone Performance: Net Turnover reached ₹67,536 crores, up 12% from ₹60,447 crores (restated) in FY23.
• Geographical Distribution (Consolidated FY24): Revenue from India constituted ₹67,955 crores, while revenue from other locations (UAE, Bahrain, Sri Lanka) was ₹2,854 crores. Exports contributed 0.5% to total turnover.
• Segment: The company operates primarily in a single reportable segment: Cement and Cement Related Products.

Cost Structure Analysis (Consolidated FY24) #

• Major Cost Components:
  • Power and Fuel: ₹18,029 crores (25.8% of Revenue) - Standalone energy costs decreased 10% YoY to ₹1,514/t.
  • Freight and Forwarding: ₹15,132 crores (21.7% of Revenue) - Standalone freight costs decreased 1% YoY to ₹1,233/t.
  • Cost of Materials Consumed: ₹10,031 crores (14.4% of Revenue) - Standalone input material costs increased 3% YoY to ₹617/t.
  • Other Expenses: ₹8,176 crores (11.7% of Revenue).
  • Employee Benefits: ₹3,009 crores (4.3% of Revenue).
  • Depreciation and Amortisation: ₹3,198 crores (4.6% of Revenue).
  • Finance Costs: ₹943 crores (1.3% of Revenue).
• Cost Management: Lower input costs, particularly energy, contributed positively to margins, partially offset by lower sales realizations and increased employee/depreciation costs due to capacity expansion.

Margin Analysis #

• Operating EBITDA (Consolidated): Increased 22% YoY to ₹13,586 crores in FY24 from ₹11,123 crores in FY23. Operating EBITDA margin improved to 19.46% in FY24 from 17.66% in FY23. Standalone operating EBITDA margin was reported at 19%.
• Profit After Tax (PAT) (Consolidated): Increased 38.3% YoY to ₹7,005 crores in FY24 from ₹5,064 crores in FY23.
• Net Profit Margin (Consolidated): Improved to 9.88% in FY24 from 8.04% in FY23. Standalone normalised net margin was reported at 10%.

Operating Leverage #

• The company demonstrated positive operating leverage in FY24, with Consolidated EBITDA growing by 22% and PAT by 38.3%, significantly outpacing the 12.3% revenue growth. This indicates effective cost management and benefits from increased scale.

Non-recurring / Exceptional Items #

• Standalone: An exceptional item charge of ₹72.67 crores was recorded in FY24 related to Stamp Duty on the Business Combination (merger of UNCL).
• Contingent Liabilities: Potential impact from Competition Commission of India (CCI) penalties (₹1,616.83 cr + ₹68.30 cr) remains a contingent liability, currently stayed by the Supreme Court. No provision has been made (Note 37(b)).

GAAP vs Non-GAAP Reconciliation #

• The financial statements are prepared under Ind AS (Indian GAAP).
• Standalone Financial Highlights refer to “Normalised PAT” and “Normalised EPS”. Prior year (FY22) normalisation adjusted for tax assessment gains. FY24 reported PAT appears to be the same as normalised PAT on a consolidated basis. Standalone normalised PAT is ₹6,905 crores (excluding the exceptional stamp duty item).

Earnings Per Share (EPS) Analysis (FY24) #

• Consolidated:
  • Basic EPS: ₹243.05 (vs. ₹175.56 in FY23)
  • Diluted EPS: ₹242.85 (vs. ₹175.52 in FY23)
• Standalone:
  • Basic EPS: ₹239.59 (vs. ₹171.62 in FY23)
  • Diluted EPS: ₹239.42 (vs. ₹171.58 in FY23)
• The significant increase in EPS reflects the strong growth in profitability during FY24.

UltraTech Cement Limited Financial Analysis: FY 2023-24 #

Cash Flow Analysis (Standalone FY 2023-24) #

• Operating Cash Flow (OCF): ₹10,420 crores (up from ₹9,145 crores). Driven by higher profits before tax and positive adjustments for non-cash items like depreciation.
• Investing Cash Flow (ICF): ₹899 crores (compared to ₹6,307 crores). Key components:
  • Purchase of Property, Plant & Equipment: ₹8,878 crores.
  • Net movement in Investments: Proceeds of ₹1,154 crores.
  • Interest & Dividend Received: ₹481 crores.
• Financing Cash Flow (FCF): ₹2,634 crores (slightly lower than ₹2,970 crores). Main drivers:
  • Repayment of Borrowings (Net): ₹713 crores.
  • Dividend Paid: ₹1,095 crores.
  • Interest Paid (including lease liabilities): ₹967 crores.

Working Capital Management Efficiency (Standalone) #

• Debtors Turnover: 15 days (reduced from 16 days).
• Inventory Turnover: 41 days (increased from 37 days).
• Payables Turnover: 101 days (increased from 92 days).
• Cash Conversion Cycle (CCC):
  • FY24 CCC = -45 days
  • FY23 CCC = -39 days
  • Negative CCC indicates high working capital efficiency.

Capex Analysis #

• Total Capex: ₹8,878 crores (Standalone). Consolidated Capex was ₹9,039 crores.
• Expansion Focus: 13.27 MTPA grey cement capacity commissioned in FY24, 5.4 MTPA greenfield capacity in April 2024, and acquisition of 0.54 MTPA in Jharkhand.
• Future Plans: Ongoing projects aim to add 36.2 MTPA. Planned acquisition of Kesoram Cement (10.75 MTPA) will bring total capacity near the 200 MTPA target. A capex of ₹32,400 crores is planned over the next three years.

Dividend and Shareholder Returns #

• Dividend Recommendation: ₹70 per equity share, totaling ₹2,020.84 crores (up from ₹38 per share).
• Payout Ratio: 29% of standalone normalised net profit.
• ESOS: The company continues to utilize its Employee Stock Option Schemes.

Debt Service Coverage #

• Interest Coverage Ratio (Standalone): 11.83 times (improved from 11.10 times).
• Debt Service Coverage Ratio (Standalone): 2.26 times (decreased from 3.12 times).
• Net Debt/EBITDA (Consolidated): 0.2x. Standalone Net Debt/EBITDA improved to 0.12 times in FY24 from 0.27 times in FY23.

Liquidity Position #

• Current Ratio (Standalone): 0.89 times (stable compared to 0.83 times).
• Cash and Cash Equivalents (Consolidated): ₹5,863 crores.
• Cash Conversion Cycle (CCC): -45 days.
• Credit Rating: Maintained highest credit ratings (AAA/Stable for long-term, A1+ for short-term) from CRISIL, India Ratings, and CARE. International ratings are BBB- (Fitch) and Baa3 (Moody’s).

Free Cash Flow (FCF) Yield #

• Free Cash Flow (FCF) (Standalone): ₹1,542 crores.
• Market Capitalisation: ₹2,81,333 crores.
• FCF Yield (Standalone): 0.55%.

Financial Analysis of UltraTech Cement Limited (July 22, 2024) #

Profitability Analysis #

Operating EBITDA Margin #

• Standalone Operating EBITDA Margin improved to 19% in FY24 from 17% in FY23.
• Previous trends: 22% in FY22, 26% in FY21, and 22% in FY20.
• FY24 improvement attributed to lower input costs and volume growth, partially offset by lower sales realisations.
• Consolidated Operating EBITDA/MT for India operations grew by 9% YoY in FY24.

Net Profit Margin #

• Standalone Net Profit Margin increased to 10% in FY24 from 8% in FY23.
• Previous trends: 11% in FY22, 13% in FY21, and 9% in FY20.
• FY24 margin increase reflects higher volume and lower energy costs, offset partially by higher interest and lower realisations.
• Consolidated Profit After Tax (PAT) was INR 7,005 crores in FY24.

Return on Equity (ROE) / Return on Net Worth (RONW) #

• Standalone RONW improved to 12% in FY24 from 10% in FY23.
• Previous trends: 15% (FY22), 14% (FY21), and 16% (FY20).
• MD&A notes a 28% increase in RONW in FY24 vs FY23, driven by higher Net Profit.

Return on Capital Employed (ROCE) #

• Standalone ROCE increased to 14.2% in FY24 from 12.1% in FY23.
• Previous trends: 14% (FY22), 14% (FY21), and 12% (FY20).

UltraTech Cement Limited: Analysis of AGM Notice and Strategic Outlook (FY2024-25) #

Report Date: July 22, 2024

Executive Summary #

This report analyzes the key resolutions proposed in UltraTech Cement’s 24th AGM Notice and integrates contextual information from accompanying documents. The analysis focuses on strategic initiatives, management guidance, market outlook, capital expenditure, efficiency targets, and potential risks/opportunities. Key themes include aggressive capacity expansion towards 200 MTPA, leadership continuity, strong financial performance in FY24, significant focus on sustainability initiatives, and a positive outlook based on India’s infrastructure growth.

Analysis of Key AGM Resolutions #

• Item 1 & 2 (Financials & Dividend): Adoption of FY24 audited financials and declaration of a ₹70/share dividend. This reflects strong FY24 performance and a commitment to shareholder returns, supported by robust cash flows despite significant capex (₹9,000 Cr in FY24).
• Item 3 (Director Re-appointment): Re-appointment of Mr. Kumar Mangalam Birla ensures continuity at the Chairman level, reinforcing strategic oversight from the Aditya Birla Group.
• Item 4 (Cost Auditors): Ratification of remuneration (₹24 Lakhs each) for two cost auditors underscores continued focus on cost management and regulatory compliance.
• Item 5 & 6 (Independent Directors): Appointments of Ms. Anita Ramachandran and Mr. Anjani Kumar Agrawal signal board refreshment and strengthening of expertise in HR/Management Consulting and Advisory/Risk/Sustainability, respectively. This aligns with enhancing corporate governance and ESG focus.
• Item 7 & 8 (WTD & CMO Appointment): Appointment of Mr. Vivek Agrawal as Whole-time Director & CMO (until Dec 2026) elevates a key internal executive with extensive marketing experience to the board, indicating strategic emphasis on market leadership and go-to-market execution during capacity expansion. The detailed remuneration structure (₹13.1L basic/month + allowances/incentives) provides insight into executive compensation benchmarks.
• Item 9 (MD Re-appointment): Re-appointment of Mr. Kailash Chandra Jhanwar as Managing Director (2 years from Jan 2025) ensures leadership stability and continuity during a critical phase of large-scale expansion projects and potential Kesoram integration. His experience is highlighted as crucial for navigating growth. The remuneration structure (₹25.2L basic/month + allowances/incentives) reflects leadership compensation at the highest level.

Strategic Initiatives & Capital Expenditure #

• Capacity Expansion: The core strategy revolves around aggressive, “globally unprecedented” capacity expansion.
  • Milestone: Reached 150+ MTPA capacity (Apr 2024).
  • FY24/25 Additions: 13.81 MTPA (FY24) + 8.7 MTPA (Q1FY25, incl. Burnpur acquisition).
  • Ongoing Projects: 34 MTPA expansion across 16 locations.
  • Acquisitions: Kesoram Cement (~11.4 MTPA, pending approvals), Parli grinding unit (1.1 MTPA + 1.2 MTPA expansion).
  • Target: Reaching 200 MTPA, cementing its position as #3 globally (ex-China) and #1 in India.
• Capital Expenditure:
  • FY24 Capex: ₹9,000 Crores.
  • Planned Capex: ₹32,400 Crores over the next three years (FY25-FY27), primarily funded through internal accruals, facilitated by strong operating cash flow and low leverage (Net Debt/EBITDA 0.2x).

Management Guidance & Assumptions #

• Guidance (Implicit): Continuation of strong volume growth driven by infrastructure and housing demand in India. Ability to execute large-scale capex efficiently and integrate acquisitions successfully. Maintaining cost competitiveness. Progressing on sustainability targets.
• Assumptions: Stable/favorable macroeconomic conditions in India. Continued government focus on infrastructure spending. Manageable input cost environment (particularly energy and logistics). Timely regulatory approvals for expansions and acquisitions (e.g., Kesoram). Ability to maintain market share despite increasing competition.

Market Outlook & Opportunities #

• Positive Macro Backdrop: India remains the fastest-growing major economy (8.2% FY24 GDP, ~7.2% FY25 proj.).
• Infrastructure Focus: Government’s sustained push on infrastructure (e.g., ₹11.1L Cr outlay for FY25, PM Gati Shakti) provides significant tailwinds for cement demand. Morgan Stanley projects ~15.3% CAGR in India’s infra investments over the next five years.
• Housing Demand: Urbanization, nuclearization, and government focus on affordable housing (3 Cr new houses planned) support residential cement demand.
• Market Position: UltraTech, as India’s #1 cement and RMC player with an unparalleled footprint (59 locations, 300+ RMC plants), is well-positioned to capture this anticipated market growth.

Efficiency & Sustainability Focus #

• Operational Efficiency: Emphasis on cost leadership through scale, operational optimization (e.g., CFD modeling), and digital initiatives (Smart Manufacturing, LCT). Ratification of Cost Auditors reinforces cost monitoring.
• Sustainability Leadership: Deep integration of ESG into strategy.
  • Decarbonization: Net Zero by 2050 target. Achieved 12% Scope 1 Net CO2 emission reduction (vs 2017). Focus on blended cements (69.2% of sales).
  • Energy Transition: EP100 achieved. RE100 target (85% green energy mix by 2030). Current 890 MW green capacity (612 MW RE + 278 MW WHRS), targeting 1000 MW. 22% electricity substitution via green power in FY24. No further thermal power investments. Exploring kiln electrification (Coolbrook partnership).
  • Circular Economy: 5.12% TSR. Utilized significant industrial/agro/municipal waste. Plastic Negative (3.4x). 20.85% recycled input material.
  • Water Stewardship: 5 times water positive. Focus on rainwater harvesting, water-efficient products (Pervious Concrete).
  • Green Logistics: Piloting EV trucks; >480 CNG/LNG vehicles deployed.
  • Recognition: High ESG ratings (CDP, S&P Global CSA).

Risk Assessment & Sensitivity (Inferred) #

• Key Risks:
  • Execution Risk: Managing large-scale, multi-locational capex and integrating acquisitions (esp. Kesoram) presents significant execution challenges.
  • Market Risk: Dependency on sustained Indian economic growth and infra spending.

UltraTech Cement Limited Financial Analysis Report (FY24) #

Auditor’s Opinion and Qualifications #

• Opinion: Unqualified opinion issued by B S R & Co. LLP and KKC & Associates LLP on both Standalone and Consolidated Financial Statements for the year ended March 31, 2024. Statements give a true and fair view in conformity with Ind AS and the Companies Act, 2013.
• Emphasis of Matter: Note 33(b) (Standalone) / Note 37(b) (Consolidated) highlights CCI penalty orders (‘1,616.83 Cr & ‘68.30 Cr). Appeals are pending before the Supreme Court (stay granted on the larger penalty). The Company believes it has a strong case and has not made a provision. A deposit of ‘161.68 Cr (10% of the larger penalty) has been made and recorded as an asset.
• Key Audit Matters (KAMs):
  • Revenue recognition - Discounts, incentives and rebates: Complexity due to multiple schemes across regions and competitive pressures requires significant judgment.
  • Regulations - Litigations and claims: Complex regulatory environment (indirect taxes, legal, regulatory proceedings) requires significant judgment in estimating outcomes and determining provisions/disclosures.

Key Accounting Policies and Changes #

• Basis: Financial statements are prepared on a historical cost basis under Ind AS, except for items measured at fair value or based on actuarial valuation.
• Key Policies: Standard policies cover PPE, Intangible Assets, Impairment, Inventories, Leases (Ind AS 116), Revenue Recognition (Ind AS 115), Financial Instruments, Business Combinations, Employee Benefits, Borrowing Costs, Government Grants, Provisions, and Taxes.
• Changes:
  • Amendments to Ind AS 1 regarding the disclosure of material accounting policies from April 1, 2023, impacting disclosure format.
  • The Company opted for the new tax regime under Section 115BAA of the Income Tax Act, 1961, from FY 2023-24.

Internal Control Effectiveness #

• Auditor Assessment: Adequate internal financial controls with reference to financial statements were operating effectively as of March 31, 2024.
• Audit Trail Exception: The accounting software’s audit trail facility was not enabled at the database level to log direct data changes.

Regulatory Compliance Status #

• General Compliance: General compliance with major applicable acts and regulations, but notes a “delay in one intimation during the period under review”.
• Financial Reporting: Compliance with Ind AS largely confirmed, subject to the audit trail point.
• Specific Issues:
  • Audit Trail (Edit Log): Lack of enablement at the database level signifies a gap in meeting the requirements of Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
  • Competition Law: Significant pending litigation with CCI.
• Penalties/Strictures: No penalties or strictures were imposed by stock exchanges, SEBI, or other statutory authorities on capital market-related matters in the last three years.

Legal Proceedings and Potential Impact #

• CCI Penalties: Penalties totalling ~‘1,685 Cr were imposed in 2016/2017. Appeals are pending before the Supreme Court, with a stay granted on the larger penalty (‘1,616.83 Cr).