The Hindu Business Line : High input cost pulls ACC Q1 net down marginally

Mr Sumit Banerjee (left), Managing Director, ACC, and Mr Narottam Sekhsaria, Chairman, addressing shareholders at the company’s 72nd annual general meeting in Mumbai on Thursday. — Vivek Bendre

Our Bureau

Mumbai, April 24 Hit by high input cost, Holcim-owned cement major ACC has reported 1.70 per cent fall in net profit at Rs 357.54 crore (Rs 363.75 crore) in the first quarter ended March 31, 2008. The company has announced a divided of Rs 20 per equity share for calendar year 2007.

Sales turnover during the first quarter increased 7.2 per cent to Rs 1,796 crore (Rs 1,675 crore). Sales volume rose 9.5 per cent to 5.40 million tonnes. Power and fuel cost jumped 25 per cent to Rs 329 crore (Rs 263 crore). The operating margins declined by 4.4 per cent on quarter-on-quarter basis.

Mr Sumit Banerjee, Managing Director, ACC, said costs went up by 12 per cent in the quarter due to significant rise in raw material prices such as coal, gypsum, power, freight, etc. Coal price increased by around 31 per cent. Accordingly, the company’s cement prices went up by only 3 per cent quarter-on-quarter basis.

On the impact of cement price rise on construction industry, Mr N.S. Sekhsaria, Chairman, ACC, said, “The share of cement in total construction cost has actually declined from around 15 per cent a decade ago to 10 per cent. The cost of other construction materials have appreciated much more than cement.” Government taxes and levies account for about Rs 69 per bag, he added.

Expansion plans

The company has proposed to increase cement production capacity from 22.4 million tonne per annum (mtpa) to 30.4 mtpa by 2010 with a total outlay of Rs 4,000 crore.

In 2009, ACC will augment Bargarh Work’s capacity by 1.18 mtpa to 2.14 mtpa with 30 mw captive power plant; the expansion of New Wadi Plant in Karnataka to 3 mtpa with two grinding units is expected to go on stream mid-2009; and a new production plant of 3 mtpa is being set up with 25 mw captive power plant in Chanda, Maharashtra.

The company will enhance the number of ready-mix concrete (RMC) units from 26 to 46 in 2008. It has transferred the RMC business to its wholly-owned subsidiary ACC Concrete Ltd with effect from January 1, 2008. As a consequence, the results for the quarter ended March 31, 2008 are not comparable with the corresponding period of the previous year, the company said in a release.

Outlook

While the outlook for demand and supply is positive, the industry faces challenges of meeting steep cost escalations which exerts pressure on margins, said Mr Banerjee.

The company shares on the Bombay Stock Exchange plunged 5.49 per cent to Rs 798 on Thursday.

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