CHENNAI: India Cements’ has begun the financial year amid rough weather with its net profit nose diving to Rs 24.98 crore in first quarter ending June 30, 2010 against Rs 144 crore in the same period last year. The capacity overhang in the south and slump in cement prices have depressed ICL’s bottomline.
What has helped the company to stay on profit track is the profit of Rs 25.76 crore realised from the sale of entire its stake in Bharti Cement in Andhra Pradesh. Though company stepped up sales volume, price loss of Rs 672 per tonne pulled down net sales to Rs 880.69 crore (Rs 953.48 crore).
Share of central rights income pertaining to the IPL from BCCI has not been considered in the quarter, pending quantification of the same.
During the quarter, clinker production was up by 3% at 21.21 lakh tonnes (20.65 lakh tonnes).
ICL has consciously adopted a strategy to sell more in TN and Kerala. It already stepped up its sales share in the two states, by 10% to 57% in July and this will be increased to 60%. "Our aim is to improve market share in higher yielding markets," ICL MD N Srinivasan told reporters on Monday.
Highlighting the "long-term" business cycle of cement industry, he said within south, while Karnataka registered a growth of over 10% in Q1, there was a negative growth of 5% in Andhra Pradesh and Kerala and Tamil Nadu registering a paltry 3% growth.
Despite the sluggish demand in south the company has been able to achieve better volumes. It is also exploring markets in the north and east, which helped in getting better realisation as compared to south.
While the EBIDTA has remained the same during the last three years, the price disparity had affected the company’s performance in the first quarter of this year, Mr Srinivasan said. EBIDTA during Q1 more than halved to Rs 128.53 crore ( Rs 293.11 crore). Interest charges reduced to Rs 29.75 crore ( Rs 38.48 crore) while depreciation charges claimed Rs 59.85 crore (Rs 57.07 crore).
He said on top of the price loss of Rs 672 per tonne, the input costs went up due to the increase in the cost of fly ash, power besides the increase in excise duty from 8% to 10%.
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