The Hindu Business Line : India Cements posts 9-fold rise in net

Chennai April 20 The India Cements Ltd, which has reported a nine-fold growth in net profit for 2006-07 over the previous year, expects the buoyancy to hold during the current year.

Addressing a press conference here on Friday, Mr N. Srinivasan, Vice-Chairman and Managing Director, said the company is looking at a `higher profit zone' during the current year. It is also set to benefit from the addition of ten-lakh tonne capacity, a part of its planned expansion of 20 lakh tonnes. This is happening at a time of `best prices,' he said.

The expansion would come from the modernisation of its Sankaridrug plant and upgradation at its other locations. India Cements operates six cement plants in Andhra Pradesh and Tamil Nadu, with a seventh with Visakha Cements, an associate that is to be merged with India Cements. Its total production capacity is 90 lakh tonnes.

The company has achieved 100 per cent capacity utilisation with cement production at 75.51 lakh tonnes, a 4 per cent growth over the previous year's 72.62 lakh tonnes. The gross realisation during 2006-07 was Rs 3,130 a tonne against Rs 2,460 in the previous year. Apart from the buoyancy in market, the company has also benefited from the tight rein on costs, particularly on fuel and power. Also the percentage of blended cement production has increased to 60 per cent from 52 per cent previously.

Interests costs from the current year would be significantly lower, about Rs 135 crore. The company now has over Rs 1,074 crore of long-term debt with interest cost in the range of about 10.5 per cent, Mr Srinivasan said.

On the expansion plans, he said that the company is `zeroing in' on locations where capacity could be added. It is looking at Rajasthan and Madhya Pradesh, where it has mining leases. The Himachal Pradesh project is also in the pipeline but the work has not started. The road access to limestone deposits has to be improved first, he said.

The company would initiate the statutory process of merging Visaka Cements, effective from July 1, 2006, next week. This would bring under India Cements fold over 14 lakh tonnes of cement capacity, apart from the tax benefits, he said.

Including Visaka's performance, the consolidated results show the net profit for the 2006-07 at Rs 453.30 crore (Rs 42.73 crore) on net sales of Rs 2372.92 crore (Rs 1831.52 crore).

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