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Our Bureau

Chennai, Oct. 22 “Bold, adventurous and resilient,” that was how Mr N. Srinivasan, Vice-Chairman and Managing Director, India Cements, described the company’s long-term plans that are now contributing to a record performance.

Net profit has jumped 90 per cent during the second quarter of 2007-08 over the corresponding period in the previous year; turnover is up 50 per cent; realisation has improved; and he is confident the good run will continue next year too.

The results in the current year include the performance of Visakha Cement Industry, which has been merged with India Cements with effect from July 1, 2006, and are therefore not comparable with that of the previous period.

“My view is 2008-09 would pose no problems,” as cement prices would continue to be buoyant, Mr Srinivasan told reporters at a press conference to announce the second quarter results.

His description of the company’s plans refer to the sustained expansion programme despite the extended slump it went through – India Cements reported a dividend for the first time after five years in 2006-07 – biding time till the increased production and improved efficiency would start paying off – and they have, he says.

The cement prices, which are stable now, are expected to increase from December, when the demand is likely to pick up after the monsoons. The demand is expected to far outstrip the supply and the company is well set to sustain its performance. Also, over the next year and a half the company’s production would increase from 8.9 million tonnes now to about 14 million tonnes. India Cements has more ‘headroom’ to grow its blended cement production, which would add another million tonnes a year.

The company has commissioned the new 0.6 mt a year dry process plant at Sankaridurg. Work is on to set up the two one-mt grinding plants at Chennai, and Parli in Maharashtra. Feasibility studies are on for a plant in Himachal Pradesh and the company is scouting for mining lease in Madhya Pradesh. It holds a mining lease in Rajasthan, he said.

Mr Srinivasan, said that the company has controlled its power and fuel costs in the first half of 2007-08. It has been more efficient in the market place by controlling dealer margins at ‘fair levels.’ In most cases the ultimate consumer price has been much higher than what it should be based on what the company charged the dealer.

The gross realisation during the first half of 2007-08 was Rs 3,751 a tonne (Rs 3,069). In the second quarter of the current year it was Rs 3,900, a Rs 300 jump over the previous year.

The India Cements stock closed at Rs 277.95 on the BSE, up 3.5 per cent over the previous close.

More Stories on : Financial Performance | Cement

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