The Hindu Business Line : Gujarat Ambuja net soars on higher productivity

Capacity expansion
To invest Rs 3,350 crore over the next two years
To raise total capacity from 16 mt of cement to 22 mt through brownfield expansions
The funds will come from internal accruals.

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Mumbai Feb. 2 Gujarat Ambuja Cements Ltd said its standalone net profit for the quarter ended December 31, 2006, rose by 284 per cent, lifted by higher productivity and better price realisation.

Net profit for the last quarter of its 18-month fiscal amounted to Rs 338 crore, against Rs 88 crore in the quarter ended December 2005.

Net sales rose 72 per cent, to Rs 1,329 crore from Rs 773 crore, as the company sold 4.12 million tonnes of cement, 20 per cent higher than in the year-ago quarter.

(Gujarat Ambuja Eastern was merged with the company with effect from January 1, 2006, and its operations added to the results for the quarter under consideration.)

The company did well both operationally and with respect to pricing (cement prices in the quarter were 30 per cent higher than a year ago), said Mr Anil Singhvi, Managing Director, GACL.

"We had a practically flat production of clinker, and because of our improvement in blending we could increase our productivity by 11 per cent which is very large," he said.

Other income for the quarter was also higher, at Rs 40 crore (a negative Rs 7.6 crore), on account of exchange gains and profit on sale of assets.

Total expenditure rose by 48.8 per cent, to Rs 850 crore, because of increased power, fuel and freight costs.

Mr Singhvi said that additional clinker capacity of 0.5 million tonnes (mt) that will come on stream in mid-2007 at GACL's plant in Rajasthan could lead to additional cement production of 0.8 mt on an annualised basis. This being at capital cost of just Rs 125 crore, it will boost profit margins for the current fiscal, he said.

GACL will invest Rs 3,350 crore over the next two years increasing its total capacity from 16 mt of cement to 22 mt through brownfield expansions; and its captive power capacity to 400 MW from 240 MW. The funds will come from internal accruals, said Mr Singhvi.

Two plants of 1 mt each will be commissioned by April in West Bengal and in Uttaranchal.

The company's board announced a final dividend of 40 per cent, or Rs 0.80 per share of Rs 2 each. In addition to the two interim dividends in 2005-2006, this makes for a dividend of 165 per cent.

The board also approved the change in name of GACL to Ambuja Cements Ltd.

The company's stock rose by 2.48 per cent on the BSE on Friday, to close at Rs 142.80