Madras Cements' net profit for the second quarter of 2010-11 has dropped to one-fifth of its net during the corresponding period last year.
According to a company press release, high operating costs, steep fall in cement prices due to slack demand and large capacity additions contributed to the 81 per cent drop in net profit.
Operating costs were driven by diesel price increase which hit procurement of raw materials and coal, increase in price of coal and fly ash and hike in tariff by the State Electricity Boards.
Madras Cements, which has a surplus capacity of wind energy generators, had to depend on costlier diesel generators because of the power cut imposed by the Tamil Nadu Electricity Board, according to the release.
The company, which had over 179 MW of wind power, sold 33 wind energy generators totalling over 26.40 MW to other companies within the Group for Rs 137.76 crore. These were transferred at book value, a company official said.
In May, Madras Cements announced plans to invest Rs 310 crore to set up 85 MW of captive thermal power plants including 60 MW at Ariyalur and 25 MW in RR Nagar. It has a total cement production capacity of 10.5 million tonnes distributed across five units in Tamil Nadu, Andhra Pradesh and Karnataka, and has announced plans to add 2 million tonnes.
On the NSE, the company's shares of Re 1 closed at Rs 113.25 against the previous close of Rs 112.45 on Monday.
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