The Hindu Business Line : India Cements back in black

The company has reported a profit after tax of Rs 4.58 crore on sales of Rs 1,385.39 crore for the year ended March 31, 2005 compared to a loss of Rs 95.93 crore on sales of Rs 1,232.90 crore in the previous year.

For the fourth quarter of 2004-05, the company posted a net profit of Rs 73.72 crore on sales of Rs 396.99 crore against a loss of Rs 27.46 crore on sales of Rs 346.80 crore in the previous corresponding quarter.

In 2004-05, India Cements had a net extraordinary income of Rs 63.40 crore (Rs 25.66 crore). This is from the upfront payment for equity warrants and optionally convertible warrants that the company issued on a private placement basis for Rs 392.61 crore, which has been used to repay some of the existing debt.

The remission in liability on these repayments in excess of interest accrued during the current financial year has been shown as extraordinary income net of extraordinary repayments, according to the company.

Interest and other charges for the year amounted to Rs 133.50 crore against Rs 161.68 crore in the previous year.

A company press release said the turnaround was possible by higher volumes, increase in gross sales realisation, cost cutting and reduction of interest cost as a result of the infusion of fresh funds and debt restructuring.

The release said the company's performance should be viewed in the context of a 6 per cent decline in demand in the first half of the year in the South, followed by an improvement in the second half, which resulted in an overall growth of 2 per cent in the region during the year.

Thanks to the better demand, gross realisation of cement improved by Rs 97 a tonne to Rs 2,271 for the year, compared to Rs 2,174 a tonne in the previous year. In view of the low growth in the domestic market, the company planned to step up clinker exports, taking advantage of the uptrend in global demand for cement and clinker.

The overall sales of the company, including exports and cement, was higher by 9 per cent at 63.75 lakh tonnes against 58.25 lakh tonnes in the previous year.

In view of the losses carried forward, the board of directors has not recommended any dividend for preference and equity shares.

The release said that increase in cost of petroleum products impacted the cost of generation and transport cost. Royalty on limestone was increased by Rs 5 a tonne from October 2004. The continuous increase in the ocean freight rates and in the prices of imported coal caused by regulated export from China and consequent hardening of Indonesian coal prices had their impact on the fuel prices and consequently on fuel cost per tonne of cement.

In the first two months of 2005-06, cement demand in the South grew by over 20 per cent and the company was able to perform better than the industry with a 30 per cent growth in sales volume, the release said.

Cement production during April-May 2005 was up by 35 per cent at 11.49 lakh tonnes against 8.48 lakh tonnes. Domestic sale of cement grew by 44 per cent from 7.94 lakh tonnes during April-May 2004 to 11.49 lakh tonnes in the same period this year.

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India Cements back in black