Orient Cement banks on price, volumes for better show in Q4

The company operates two plants with a total annual installed capacity of 5 mn tonnes in Telangana and Maharashtra

Orient Cement Limited, which reported over 4 per cent increase in volumes in the third quarter ending December, 2014, said things would further improve beginning the current quarter.

“The capacity utilisation stood at 82 per cent as we sold 1.02 million tonnes of cement in the third quarter as compared with 984,000 tonnes in the previous quarter. We expect a further rise in volumes to 1.2 million tonnes out of the total installed capacity of 12.5 million tonnes in the current quarter,” Deepak Khetrapal, managing director and chief executive officer of the CK Birla Group company told Business Standard.

Orient Cement operates two plants with a total annual installed capacity of 5 million tonnes in Telangana and Maharashtra, which also form the major markets of the company’s cement sold under the brand name of Birla A1 Premium.

The company reported a 35 per cent increase in net profit at Rs 31.10 crore as compared with Rs 22.91 crore in the corresponding quarter previous year while revenues rose 12.56 per cent to Rs 384 crore from Rs 341 crore in the corresponding previous quarter.

According to Khetrapal, the revenues rose mainly on the back of volume growth, in spite of a steep fall in prices on a sequential basis, while the focus on maintaining operational efficiency continued to add to the overall profitability of cement business even in times of lower prices. “We come at least second or third among the most efficient users of coal or electricity,” he said.

On a sequential basis, Orient Cement's revenues and the net profit fell when compared with its second quarter performance. That was because of the fall in cement prices, he said, adding the fourth quarter would have much better numbers because the cement prices had stabilised from December onwards. In the December quarter, the average price realisation stood at Rs 270 per bag, according to to him.

“Usually October is the worst month in terms of cement consumption as festivals mar the construction activity. So also the prices. However, our sales remained buoyant even in October last year as there was a pick up in demand from the residential construction activity,” Khetrapal said.

Sagar Cements
Hyderabad-based Sagar Cements Limited, which announced its results yesterday, reported a marginal net profit for the quarter, for the first time after last several quarters of consecutive losses. Only the second quarter was an exception where its bottom line was over twice the size of its revenues due to the windfall gain it made from the stake sale in the joint venture Vicat Sagar company.

“Though the other income played a role even in this quarter the operational improvement also added to the financial performance,” said a senior official of Sagar Cements. Total income from operations rose 5.48 per cent to Rs 124.42 crore from Rs 117.95 crore in the corresponding quarter last year. Net profit stood at Rs 1.14 crore as against a net loss of Rs 8.39 crore in the corresponding previous quarter.The plant operated at around 49 per cent capacity during the period.

Sagar Cements in its analyst presentation stated that the cement prices in South India rose to Rs 340 per bag in January, 2015 as compared to Rs 255 per bag in January, 2014.