India Cements slips into Rs 22.5 cr loss in Q2

The total income dropped by 3.3% to Rs 1,094 cr

India Cements Ltd has reported a loss of Rs 22.53 crore during the quarter ended September 30, 2013 as compared to profit of Rs 49.08 crore, a year ago. Company's total income dropped by 3.3% yoy to Rs 1,093.78 crore from Rs 1,125.68 crore.

The company said that  continued economic slowdown with practically nil growth in industrial activity coupled with weak demand for cement resulted in mounting pressure on the selling prices of  cement and thereby on the bottom line.  "This was compounded by the ever increasing cost of input materials, substantial revision in the railway freights, high volatility in the foreign exchange rates and increase in the price of petroleum products," said the company.

The average net plant realisation during quarter was lower by 12% at Rs 3,090 a tonne as against Rs 3529 a tonne resulting in erosion of the top line by Rs 107 crore.  Adding to this was the impact on account of increase in power cost, depreciation of rupee against dollar and increase in the price of petroleum products. However, the same could be contained with a control on the cost resulting in an EBIDTA of Rs 136 crore against Rs 208 crores in the same quarter of the previous year.

The company said that cement production was marginally up by two% at 24.66 lakh tonness (24.18 lakh tonnes). Sales volume was marginally lower at 24.40 lakh tonnes (24.82 lakh tonnes).

Interest charges were marginally lower at Rs 75 crore as against Rs 77 crore while depreciation was at Rs 68 crore as against Rs 70 crore resulting in a loss before exceptional items of Rs.8 crores against a profit of Rs 61 crore in the same quarter.

The Foreign exchange translation difference resulted in a charge of Rs.24 crores for the quarter against a gain of Rs.10 crores and the net loss was at Rs.31 crores before tax against a profit of Rs.72 crores in the same quarter.

V Srinivasan, Research Analyst - Cement, Angel Broking said for the second quarter, India Cements results were below estimates and top-line impacted due to poor demand scenario in its key markets in south and weak realisations.

"Company’s performance during the quarter was impacted by the political turmoil in Andhra Pradesh. OPM declined by 651bp yoy to 11.8%. Finance costs rose by 48% yoy to Rs 99 crore, impacted by Rs 30 crore write off on account of foreign exchange transaction difference.