India Cements slips into net loss of Rs 2.96 crore in Q1

The increased freight charges and fuel costs affected the performance, said the company's MD N Srinivasan

India Cements Ltd has posted a net loss of Rs 2.96 crore during the quarter ended June 30, 2014, as against a net profit of Rs 16.82 crore during the same period of previous year. The total income from operations has come down to Rs 1,228.41 crore for the quarter as compared to Rs 1,240.87 crore posted during the same period of previous year.

The costs has gone up, which had an impact in the results, though the company has seen a sequential improvement compared to the previous quarter ended March 31, 2014, said N Srinivasan, vice chairman and managing director, India Cements.

"Despite a nominal recovery in selling prices from the month of June 2014, the severe cost push have resulted in a marginal loss for the quarter," said the company. Compared to the first quarter of last year, there is an increase of almost Rs 200 per tonne in cost at present, said Srinivasan.

The company and the industry had to bear the cost on increased freight charges due to the load restrictions by transport authorities on outward and inward movement of material,increase in the prices of petroleum products and increase in railway freight which could not be passed on to the customers, it said.

The higher interest charges has also affected, as it has increased for the company to Rs 93 crore, as compared to Rs 73 crore earlier. The overall volume was lesser by three per cent at 25.58 lakh tonnes against 26.54 lakh tonnes.

He said that with price increase effected from June onwards, the company would see the the profits back and expect the scenario to be better in next 6-9 months. With more infrastructure projects are expected to be cleared in the near future and the development of a new State capital in Andhra Pradesh, the industry would see a growth in future, he said. The South Indian cement market has seen an increase of two per cent in demand during the quarter. The industry registered a growth of 9% during the first quarter of current financial year.

He also refuted the allegations of the builders associations that the cement manufacturers has increased the prices arbitrarily which has affected the business of real estate developers. He said that the cement price increase is a small percentage in the total price the builders put per square feet and "it is their strategy to divert attention from the real increase they are making in the prices," he said.

The company's debt level at present is around Rs 3,375 crore, said the company officials. The company is refinancing the debt to make it on a comfortable level and if the prices are kept at the current levels, it could slowly reduce the debt, they said. The company has seen a capacity utilisation of 69%.

Meanwhile, Trinetra Cement Ltd, part of the company, has posted a net profit of Rs 10.37 crore for the quarter ended June 30, 2014, as compared to a net loss of Rs 5.20 crore registered during the same period of previous fiscal year. The total income from operations posted a 26.7% growth at Rs 146.48 crore for the quarter compared to Rs 115.59 crore posted during the corresponding quarter of last year.