India Cements, the southern cement major has registered 38% fall in net profit to INR 21.47 crore for the quarter on a sale of INR 783.50 crore, a fall of 11%.
Though the de growth in bottom line was steeper than expected the company has moved back to black after a disastrous second quarter ended Sep 2010, where it has recorded a net loss of INR 33.63 crore on a sales of INR 842.84 crore down by 15%YoY.
Key highlights
1. Sales for the third quarter was lower by 11% to INR 783.50 crore for the quarter impacted by 23% YoY lower despatches for the quarter to 2.04 million tones. Higher realization on year on year basis seems to have moderated the impact of strong slide in despatches to some extent. Third quarter of an April-March fiscal year is an empirically a weak quarter due to active monsoon season in south east peninsular India, where it has strong presence.
2. On the back of slack demand, the production of clinker for the quarter stood lower by 22.1% to 1.688 million tones and cement grinding was lower by 21.4% to 2.096 million tones.
3. The company which operated its plant at lower capacity in the wake of slack demand has managed to reduce the variable cost (as % to sales net of stocks) even though the fixed cost has been higher/flat as proportion to sales, net of stocks. While the material cost, transportation charges are lower by 130 bps each to 13.1% and 18.7% respectively, the power & fuel cost was nearly flat at 28.6% with rising coal prices negating the lower fuel consumption in volume in line with lower production. However the fixed cost i.e. staff cost was higher by 100 bps to 7.7% and that of other expenses was up by 40 bps to 16.1%. This has resulted in overall 170 bps expansion in operating margin, which inturn resulted in flat operating profit negating the impact of lower sales.
4. Other income was higher at INR 3.83 crore compared to nil in the corresponding previous period. Spurred thus the PBIDT was up by 3% to INR 132.61 crore. However impacted by higher interest cost (up 36% to INR 40.65 crore) and higher depreciation (up 8% to INR 61.69 crore) the PBT before forex gain was lower by 26% to INR 30.27 crore.
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