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UltraTech Cement allots Rs 600 cr for captive power plants

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Mr Kumar Mangalam Birla, Chairman, UltraTech Cement Ltd, addressing shareholders at the company AGM in Mumbai on Wednesday. - Paul Noronha

Mumbai , Aug. 24

ULTRATECH Cement Ltd has earmarked Rs 600 crore for installation of captive power plants, chiefly a 92-megawatt lignite-based plant at Gujarat Cement Works, which will be commissioned by July 2007.

This will lead to savings in power costs of Rs 110 crore annually for the company, said Mr Kumar Mangalam Birla, Chairman, UltraTech, at the company's AGM on Wednesday.

An additional Rs 190 crore has been earmarked as capital expenditure towards de-bottlenecking plants and for introducing measures for operational efficiency, he said.

The debt-equity ratio of the company, which was 1.44:1 during 2004-2005, will be brought down to less than 1:1 by the financial year 2008, said Mr Birla. This will be done through internal accruals and replacement of high cost debt, he said.

During the year gone by, the company raised Rs 500 crore and repaid long-term borrowings of Rs 612 crore, bringing down borrowing costs from 7.7 per cent in FY 04 to 6.8 per cent in FY 05.

The advertisement spend for the current year for UltraTech has been budgeted at Rs 25 crore. The previous year saw an ad-spend of Rs 67 crore, out of which Rs 50 crore was on account of one-time brand transition expenses (from L&T cement to UltraTech).

The company is expected to report a topline and bottomline CAGR of between 10 per cent and 15 per cent during the current year, said Mr Birla.

UltraTech had to take a hit of Rs 76.84 crore on its balance sheet due to diminution of assets of Narmada Cement, which has accumulated losses of Rs 175 crore, he said.

As a BIFR company, Narmada Cement would get sales tax deferment for eight years amounting to Rs 75 crore and a waiver of electricity duty for the same period, which would allow it a leeway of Rs 25 crore, he said.

Improvement of operational efficiency is on the cards. Manpower strength has been reduced from 1,000 to 370, clinker capacity has been improved from 3,650 tonnes per day to over 4,000 tonnes, and the company is looking towards captive power, Mr Birla said.

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