Ramco Cements PBT declines 15% to Rs 110 crore on sluggish demand

Expects Rs 3,530 crore expansion programme to be completed in near future

Ramco Cements posted a decline of 14.65 per cent in profit before tax for the quarter ended December 31, 2019, at Rs 110.89 crore as compared with Rs 129.93 crore registered during same period last year. The company is expected to complete various capacity expansion projects worth Rs 3,530 crore in the near future.

"During the current quarter, the company witnessed sluggish demand in its core markets, coupled with pressure on prices due to active monsoon", said the company in a statement. Demand in eastern markets was more visible during the quarter, but the prices, particularly in West Bengal, were very poor, it added. However, the company expects the trend in January 2020 to be positive with improvement in prices. 

Total revenue of the company grew six per cent to Rs 1,290 crore as against Rs 1,217.07 crore for the same period last year. The cement sale volume during the quarter grew 3.5 per cent to 2.84 million tonnes as compared with 2.74 million tonnes during the corresponding quarter last year.

The operating cost continue to remain under control owing to the favourable prices of fuels such as pet coke and diesel during the quarter ended December. The company has been constantly focussing on various cost reduction initiatives and improving productivity while maintaining the highest quality standards. It is also making continuous efforts to optimise supply chain efficiency. 

As against the proposed capex of Rs 3,530 crore for the capacity expansion programme, Ramco Cements has so far incurred Rs 1,837 crore for the period up to the end of December 2019. The capex is expected to be met partly through internal accruals and partly through borrowings. 

Its new grinding unit in Haridaspur, Odisha with a capacity of 0.9 million tonne per annum (MTPA) and expansion of grinding unit near Vizag, Andhra Pradesh from 0.95 MTPA to two MTPA is expected to be commissioned in March 2020. Expansion of clinker capacity at the Jayanthipuram, Andhra Pradesh from three MTPA to 4.50 MTPA along with waste heat recovery system (WHRS) capacity of 27 MW, is expected to be commissioned before December 2020.

A new cement plant in Kolimigundla, Kurnool district, Andhra Pradesh with clinkering capacity of 2.25 MTPA and cement capacity of one MTPA is expected to be commissioned before March 2021. The proposed plant shall have the facility including railway siding, WHRS of 10 MW and thermal power plant of 15 MW. It has doubled grinding unit in Kolaghat, West Bengal from one MTPA and it was commissioned in September 2019.