Will turn around JP assets in 3-4 years: Kumar Birla

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 Ultra Tech on Tuesday, Chairman of Aditya Birla Group Kumar Mangalam Birla (pictured) 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 34 years to turnaround these assets.”

The Birla firm had completed the acquisition in June. The ~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 Ultra Tech brand umbrella and take various other cost optimisation measures so that cash flow starts from these assets,” added Birla.

The Jaypee deal had catapulted Ultra Tech to a stronger position against its closest competitor, LafargeHolcim, which operates in India through Ambuja Cements and ACC.

With Ultra Tech’s share price surpassing ~4,000, shareholders asked Birla if the company would split shares to increase liquidity. But he replied there was no such plan. Ultra Tech shares closed at ~ 4,315.05 on the BSE on Tuesday, losing 0.7 per cent.

Ultra Tech posted a strong set of quarterly numbers for April-June 2017. Its net profit rose 15 per cent to ~897 crore, against ~780 crore in the previous corresponding quarter. The company's net sales grew 6.1 per cent to ~6,938 crore, against ~6,535 crore in the year-ago period. The company announced a dividend of ~10 a share.