2010-11 - Grasim

UltraTec
ech Cement Limited
OVER
VERVIEW
VIEW AND REVIEW OF OPERATIONS
The financial year under review began on a
positive note backed by the inherent strength of
the Indian economy. Despite the stimulus
measures announced earlier being gradually
withdrawn, rise in domestic savings, growth in
investments, revival of agriculture, manufacturing
and service sectors resulted in the economy
recording pre-financial crises growth rates and an
acceleration in GDP. However, the economy
started witnessing a rise in inflationary trend
during the second half together with a tightening
of the monetary policy, widening trade deficit,
slowdown in corporate spending and escalation
in global energy prices.
In the short to middle term, the economy will be
faced with a number of challenges – most
importantly, the high level of inflation which is
not indicating any signs of reduction and the
hardening global energy prices. A number of
measures in the form of monetary, fiscal and
policy will be required to overcome these
challenges. Despite this, the economy is poised
for good growth and has the ability to sustain the
same, linked to domestic consumption.
The year 2010-11 was indeed challenging for the
cement industry. Demand off-take was weaker
than expected due to lower realty and
infrastructure spending, extended monsoon, nonavailability
of railway wagons. Industry also
witnessed capacity additions of around 28 MMT
over and above the capacity addition of around
60 MMT in FY10. On the cost front, fuel and
energy prices showed no signs of dropping. Prices
of imported coal shot up by 37% while that of
domestic coal rose by 30%-150% in March, 2011.
Further, the cost of key inputs like fly ash, slag
and other raw materials also rose significantly.
Rising interest rates is a matter of concern. The
prevailing situation in the Middle East and
surrounding regions adversely affected exports.
The combination of slower demand growth
coupled with increased supply put pressure on
cement pricing and margins.
Against this background, your Company has
produced 32.92 MMT of cement as against 32.11
MMT in previous year. Effective capacity utilisation
was 81% as against 86% in previous year on an
expanded capacity. The aggregate sales volume
of 34.67 MMT was at par with the previous year
sales volume of 34.68 MMT.(Previous year figures
have been recasted so as to include Samruddhi’s
figures for the period 1 st July, 2009 to 31 st March,
2010).
Your Company’s net turnover stood at ` 13,210
crores as against ` 13,442 crores (recasted)
achieved in the previous year. Profit before interest
and tax stood at ` 2,063 crores as against ` 3,319
crores (recasted).
Going forward, the Government’s increased focus
on urban as well as rural infrastructure
development, housing and an enhanced capital
allocation towards infrastructure in the 12 th – Five
Year Plan, will be the major growth drivers.
DIVIDEND
Your Directors recommended a dividend of ` 6/-
per equity share (` 6/- per equity share) of ` 10/-
each for the year ended 31 st March, 2011. The
dividend distribution would result in a cash outgo
of ` 191 crores (including tax on dividend of
` 27 crores) compared to ` 87 crores (including
tax on dividend of ` 12 crores) paid for the year
2009-10. The higher outgo is on account of new
shares allotted to Samruddhi’s shareholders upon
the amalgamation of Samruddhi with your
Company.
EMPLOYEE STOCK OPTION SCHEME
During the year 157,509 stock options have been
granted by your Company. Of these, 97,106
options have been granted to eligible employees
of Samruddhi in terms of the Scheme.
109,372 stock options vested in eligible
employees. The ESOS Compensation Committee
allotted 21,117 equity shares of ` 10/- each of
your Company to some option grantees, pursuant
to the exercise of stock options.
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