India Cements Q1 net down 72%

The company had clocked Rs 62.07 cr net profit in the same quarter a year earlier

India Cements has witnessed a 72 per cent drop in its net profit for the first quarter ended June 30, 2013 for the fiscal 2013-14 and stood at Rs 16.82 crore from     Rs 62.07 crore when compared to the same period last year, a year ago. The company attributed this to the forex loss.  N Srinivasan, vice chairman and managing director, India Cements Ltd said, “The exchange translation charges due to unprecedented rupee depreciation impacted to the tune of Rs 27 crore resulting in net profit before tax of Rs 26 crore.

With the huge capacity overhung in the South, the selling price and consequently the net plant realisation continued to be under pressure during the quarter and this compounded by the ever increasing cost of inputs on account of power, fuel, depreciation of rupee against US dollar and increase in the price of petroleum products.

Average net realisation during the quarter was lower by 10 per cent at Rs 3,185 per tonne as against Rs 3,550 per tonne resulting in a top line loss of Rs 97 crore, which was the primary reasons for the reduction in EBIDTA. However, the capacity utilisation rose to 77 per cent from 66 per cent a year ago.

Further Srinivasan said, the company expects the demand for cement to go up due to the upcoming election period, and monsoon, which might push up the prices. Total income rose to Rs 1,240.72 crore from Rs 1,205.03 crore, an increase of around three per cent.

The cement major’s total expenses rose to Rs 1,115.26 crore from Rs 992.81 crore, an increase of around 12 per cent, mainly due to power and fuel which rose to Rs 330.12 crore from Rs 288.03 crore, an increase of around 15 per cent, followed by transport and handling which increased to Rs 265.03 crore from Rs 222.89 crore.

V Srinivasan, research analyst - cement,with Angel Broking, said that the analyst firm is maintaining a neutral rating on the stock.

“The company’s top-line grew by a modest 3.1 per cent yoy to Rs 1,238 crore due to low volume growth (due to poor demand) and weak cement prices. OPM plunged by 769 basis point yoy to 15.4 per cent on account of poor realizations and increase in freight, power and fuel costs. Freight costs increased due to increase in railway freight fares and higher diesel costs,” he said.