PAKISTAN: DG Khan Cement

DGKC has made a relatively better start to the fiscal year, as its bottom line swung to green in 1QFY11 after three straight quarters of losses.

However, compared to the same quarter last year, the companys profit fell massively on the heels of lower cement off-take and higher production costs.

Companys average retention price was relatively higher than the previous year, but unfortunately, the monsoon saga resulted in lower cement off-take and in turn lower revenue.

Supply chain distractions, stemming from damaged roads and rail links, along with a dreary pace of construction activities across the country pushed the total dispatches down to around 0.92 million tons in 1QFY11, down from 1.17 million tons in the same period last year. 

Local dispatches plummeted by 27 percent to 0.709 million tons. Export dispatches, however, remained relatively stable, registering 3 percent growth, according to a company official.

Margins didn benefit from the impact of higher prices on the back of higher cost of production that surged by around 30 percent. Production costs increased due to higher coal prices--which reached $130 per ton from around $103 per ton in the same period last year, lower capacity utilization and gas curtailment. 

Despite lower profitability during the first quarter, the outlook is not all doom and gloom for the largest cement manufacturer in the north, since proximity to submerged areas might help the company realize higher cement sales from next quarter onwards.

The industry expects to experience record volumetric sales after the spring harvest, anticipating demand to grow by 7 to 10 percent in FY11. Moreover, the companys margin may also improve as cement prices are on the rise, on one hand, and Waste Heat Recovery plant will increase cost efficiency, on the other.

NEPAL: Hetauda cement resumes production

BHIMPHEDI: Hetauda Cement Industry has resumed production from today in a gap of one month.

The industry halted cement production for the last four weeks though it had stored necessary raw material and limestone after its clinker machines required maintenance. The furnace in the factory also needed repair.

According to industry management, it took more days than the expected to carry out repair works as technicians had to be brought from India.

It said that special bricks made of modern technology were brought from India to repair the furnace.

MALTA: Increase of cement excise duty ‘a terrible shock’

The immediate excise duty of EUR9 per tonne on imported cement is a “bolt out of the blue”, and has come as “a terrible shock” for all stakeholders involved in the construction industry, Vince Farrugia, the director general of the Chamber which represents Small and Medium Enterprises (SMEs) in Malta, told The Malta Business Weekly. 

Following the announcement made by Finance Minister, Tonio Fenech, when presenting next year’s budget earlier this week, to increase the excise duty on cement with immediate effect, Mr Farrugia said that whereas in other countries governments are coming up with schemes and incentives to boost development, the construction industry in Malta is being severely hindered by such ill-timed increases. “This will indirectly lead to increases in property prices, at a time when the construction industry, which finds itself in a grave situation, has yet to fully recover from the economic recession.”

Mr Farrugia described the decision “as illogical and will increase property prices by as much as eight to 10 per cent”, adding that roughly “12 per cent of the country’s workforce is employed in one way or another in construction, which is only three per cent less than the amount of people employed in the tourism industry. Something needs to be done and fast to remedy the current dismal situation regarding construction in Malta”. 

However, Michael Falzon, the president of the Malta Developers’ Association, offered a different view to the increase, despite commenting “that it is only the government who stands to gain by the increase”. 

Mr Falzon said that based on his calculations the EUR9 cost on cement is actually minimal, when compared to the annual turnover of the industry. 

The cost, which he calculated based on the total cement imports of the previous year, amounts to around EUR3m per annum, he said. Although it is an increased cost that nobody would have liked, it is marginal when compared to what the construction industry makes in a year.

The reasoning offered in the budget is the polluter pays principle, but while an environmental impact is undeniable, Mr Falzon said that this, in his opinion, is a good pretext for something which would be better described as a revenue raising exercise.

He added that according to statistics, Malta imports around 300,000 tonnes of cement annually.

INDIA: Prism Cement slides after weak Q2 results

Prism Cement fell 1.33% to Rs. 59.15 at 11:23 IST on BSE, after net profit tumbled 88.9% to Rs. 4.60 crore on 14% rise in net sales to Rs. 749.70 crore in Q2 September 2010 over Q2 September 2009.

The company declared its results after market hours on Wednesday, 27 September 2010.

Meanwhile, the BSE Sensex was up 62.53 points, or 0.21% at 20,067.90.

On BSE, 60,108 shares were traded in the counter as against an average daily volume of 3.35 lakh shares in the past one quarter.

The stock hit a high of Rs. 59.70 and a low of Rs. 58.95 so far during the day. The stock had hit a 52-week high of Rs. 65.90 on 15 October 2010 and a 52-week low of Rs. 36.50 on 3 November 2009.

The mid-cap stock had outperformed the market over the past one month till 27 October 2010, declining 0.42% compared with the Sensex's 0.56% fall. It had also outperformed the market in past one quarter, gaining 18.95% as against 10.66% rise in the Sensex.

The company has an equity capital of Rs. 503.36 crore. Face value per share is Rs. 10.

The board of Prism Cement declared an interim dividend of Re 1 per share for the year ending March 2011.

INDIA: Ultratech Cement

UltraTech's performance for the second quarter reflects the first financial results post the amalgamation of Samruddhi Cement Limited with the Company. The results include the performance of Samruddhi with effect from 1st July, 2010 which was the Appointed Date for the amalgamation. 

The results for the corresponding Quarter of FY10 have been re-casted to include Samruddhi's performance for like-for-like comparison.

Based on re-casted figures, for quarter ended September 2010, Net Sales fell 9% to Rs.3,215 crore. Profit before Interest, Depreciation and Tax fell 60% to Rs. 476 crore, while Profit after Tax is crashed 82% to Rs. 116 crore.

The Company produced 8.61MMT (8.36 MMT) of grey cement. The combined cement and clinker sales of grey cement was 9.10 MMT (8.64) MMT.

A subdued demand on account of monsoons, capacity additions, fall in realisation coupled with increase in costs has impaired the Company's performance. The prices of imported coal rose from US$ 76/Mt to US$ 110/Mt substantially escalating the Company's energy cost. These factors have put the Company's margins under pressure.

The Scheme of Amalgamation (the Scheme) of Samruddhi Cement Limited (Samruddhi) with the Company has been sanctioned by the Hon'ble Bombay High Court on 11/06/2010 and by the Hon'ble Gujarat High Court on 01/07/2010. The Scheme became effective from 01/08/2010 and is operative from the Appointed Date i.e. 01/07/2010. The results for the period ended 30/09/2010 are inclusive of Samruddhi from the Appointed date i.e. 01/07/2010.

Upon effectiveness of the Scheme, the authorised Share Capital of the Company increased to ` 2,800,000,000, consisting of 280,000,000 equity shares of ` 10/- each.

In terms of the Scheme, shareholders of Samruddhi have been allotted 149,533,469 equity shares of ` 10/- each of the Company as fully paid-up in the ratio of 4 (four) equity shares of the Company of face value ` 10/- each fully paid-up for every 7 (seven) equity shares of Samruddhi of face value ` 5/- each fully paid-up.

The ESOS Compensation Committee has on 07/09/2010 allotted 920 equity shares of ` 10/- each of the Company to option grantees pursuant to the exercise of stock options under the Company's Employee Stock Option Scheme - 2006.

The paid-up equity share capital of the Company increased from 124,487,079 equity shares of ` 10/- each to 274,021,468 equity shares of ` 10/- each as a result of the allotment of equity shares in terms of the Scheme of Amalgamation (the Scheme) and exercise of stock options under the Company's Employees Stock Option Scheme - 2006.

The Company's wholly-owned subsidiary 'UltraTech Cement Middle East Investments Limited' has completed the acquisition of ETA Star Cement and has acquired management control of its operations in the UAE, Bahrain and Bangladesh.

Directors

The Board at its meeting held today inducted Mr. Adesh Gupta, Whole-time Director and CFO of Grasim Industries Limited as an additional director of the Company with immediate effect.

Outlook

The demand for cement is expected to grow around 10% on the back of a good monsoon and the government's initiatives to boost rural demand, infrastructure and housing. These aspects augur well for the Company.

Ultratech Cement: Re-casted Results

	Quarter ended
	30thSept,2010	30thSept,2009 (LFL)	30thSept,2009
Net Sales	3,215	3,538	1,541
PBIDT	476	1,184	501
PAT	116	631	251