Friday, November 14, 2014

INDIA: India Cements returns to black in Q2

The India Cements Ltd. (ICL) has returned to black in the second quarter ended September 30, 2014, after reporting loss for four quarters in a row.

It has reported profit for the quarter despite a drop in volume and rising cost pressures. This was possible mainly due to an increase in net plant realisation.

The company reported a net profit before tax of Rs.7.49 crore for the quarter under review against a loss of Rs.31.44 crore in the same period last year. Sales volume was down three per cent at 23.51 lakh tonnes against 24.40 lakh tonnes. Net sales were higher at Rs.1,131.68 crore against Rs.1,085.93 crore. The company took a knock of Rs.8.81 core in foreign exchange loss during the quarter under review.

Variable cost was up four per cent due to a combination of increase in freight charges caused by load curbs by transport authorities and increase in royalty, among others.

The net plant realisation for the quarter under review stood at Rs.3,506, up from Rs.3,060 a tonne in the same quarter last year. Sequentially, there was an increase of nearly Rs.200 a tonne in net plant realisation for the quarter under review vis-à-vis the first quarter of the current year.

Addressing a press conference here on Wednesday, T. S. Raghupathy, Special Adviser to the Group, said the cement industry reported a nine per cent growth in the first-half. However, the growth in the South was the weakest among the regions, he pointed out. Tamil Nadu, Telangana and Andhra Pradesh, the principal markets for India Cements, virtually saw de-growth, he said. The bifurcation of composite Andhra Pradesh was expected to trigger a rise in demand, he said. “We have not seen this happening. Every one is taking a cautious approach,” he added. The Securities and Exchange Board of India (SEBI) had observed that the company could not adjust certain non-recurring exceptional items of expenses (recompense paid to banks of Rs.57.13 crore and fuel and electricity charges of Rs.69.43 crore) against general reserves as part of the merger of Trinetra Cement and Trishul Concrete Products with The India Cements. Consequently, the audit committee of the company has recommended modification of the financial statements, which resulted in the loss increasing to Rs.162.41 crore for 2013-14, up from Rs.35.85 crore reported earlier.

To a query on the proposed move to raise funds to the tune of Rs.500 crore, V. M. Mohan, President, Corporate Finance, said it was primarily intended to improve the leverage and meet normal capital expenditure.

On the move the spin off Chennai Super Kings (CSK) into an independent entity, he said this could help CSK to look at sports in its totality going forward.

The shares of India Cements closed on the BSE at Rs.108.10, down from Rs.109.10 on Tuesday.

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