ACC drops after poor Q2 result

ACC lost 4.14% to Rs 1,180 at 13:54 IST on BSE after consolidated net profit fell 36.85% to Rs 261.76 crore on 3.57% decline in sales turnover to Rs 2795.23 crore in Q2 June 2013 over Q2 June 2012.

The company announced Q2 results during market hours today, 25 July 2013.

Meanwhile, the BSE Sensex was down 186.30 points, or 0.93%, to 19,904.38.

On BSE, 70,266 shares were traded in the counter as against an average daily volume of 25,432 shares in the past one quarter.

The stock hit a high of Rs 1,211.70 and a low of Rs 1,155 so far during the day. The stock had hit a record high of Rs 1,514.95 on 15 October 2012. The stock had hit a 52-week low of Rs 1,106.75 on 5 April 2013.

The stock had underperformed the market over the past one month till 24 July 2013, rising 5.66% compared with the Sensex's 8.36% gain. The scrip had also underperformed the market in past one quarter, rising 1.33% as against Sensex's rise of 4.75%.

The large-cap company has an equity capital of Rs 187.75 crore. Face value per share is Rs 10.

Demand for cement during the second quarter of the year was lower than seasonal expectations which resulted in weak market conditions, leading to a decline in operating EBITDA and net profit, ACC said. The company is implementing a number of initiatives to further improve its operational efficiencies and to optimize distribution and logistics to counter adverse market conditions.

Meanwhile, Swiss cement major Holcim on Wednesday, 24 July 2013, announced a major restructuring of its India operations. The board of directors of Ambuja Cements on Wednesday, 24 July 2013, approved a proposal, wherein Ambuja will first acquire from Holderind Investments, Mauritius (Holcim), a 24% stake in Holcim India for a cash consideration of Rs 3500 crore, followed by a merger of Holcim India into Ambuja. The intra-group transaction will result in Ambuja holding 50.01% stake in ACC. The merger swap ratio proposed by two independent accounting firms and approved by Ambuja's board, is one Ambuja share for 7.4 Holcim India shares, translating into an implied swap ratio of 6.6 Ambuja shares for every ACC share, Ambuja said in a statement. Based on the approved merger ratio, Ambuja will issue 58.4 crore new equity shares of the company to Holcim, as consideration for the merger. Post the merger, the expanded capital base of Ambuja (post cancellation of the shares held by Holcim India in Ambuja and the issuance of new shares as aforesaid) will increase by 28%. Holcim will then own 61.39% of Ambuja and Ambuja in turn own 50.01% of ACC.

In addition, Ambuja's board also provided its approval for Ambuja to make commercially reasonable efforts to invest up to Rs 3000 crore to acquire an economic ownership in ACC of up to 10% without triggering a mandatory open offer.

Ambuja said that this restructuring exercise is expected to be EPS accretive from year one post completion of the transaction. There is synergy potential of about Rs 900 crore through supply chain and fixed cost optimization expected to be realised in a phased manner over two years post completion of the transaction.

ACC manufactures cement and ready mixed concrete. Switzerland's Holcim held 50.01% in ACC (as per the shareholding pattern on 30 June 2013).

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