The Hindu Business Line : Higher input costs drive down ACC’s net profit

Mumbai, Oct. 23 Saddled by the rise in input cost and taxes, ACC Ltd has reported a 3 per cent drop in standalone net profit at Rs 284 crore in the quarter ended September 30, against Rs 292 crore registered in the same period last year.

Sales turnover rose 10 per cent to Rs 1,853 crore (Rs 1,679 crore) in the quarter under review. Sales volume grew 3.8 per cent to 4.9 million tonnes.

Sales were impacted by the early onset of monsoon and unprecedented floods in Bihar and Orissa, the company said.

The fall in net profit was attributed to increase in Government taxes and duties, which went up by 15 per cent. Besides, fuel cost increased 34 per cent and other input costs by 8 per cent. Cement prices net of Government taxes and duties were up 5 per cent. Realisation in the quarter under review was up 10 per cent at Rs 189 for every 50 kg bag against Rs 172 in the quarter ended June 30.

Total expenditure was up 11 per cent at Rs 1,440 crore (Rs 1,301 crore) as power and fuel cost jumped 28 per cent to Rs 419 crore (Rs 327 crore) and freight cost rose 9 per cent to Rs 236 crore (Rs 216 crore).

On a consolidated basis the net profit in the quarter was down 8 per cent at Rs 260 crore (Rs 282 crore), even as sales rose 13 per cent to Rs 1,914 crore (Rs 1,687 crore).

In January 2008, the company transferred its ready-mix concrete business to a wholly-owned subsidiary — ACC Concrete Ltd — for a consideration of Rs 100 crore. “Consequent to the transfer of the business, ACC has only a single segment comprising its cement operations. Further, the standalone results for the quarter and nine months ended September 30, 2008 are not strictly comparable with those of the corresponding previous period,” the company said.

Foreseeing challenges

Given the marked slowdown in the economic growth due to the financial crisis, ACC has announced a subdued guidance for the coming year.

Mr Sumit Banerjee, Managing Director, said while the GDP growth targets are being moderated to around 6.5-7 per cent, ACC is of the view that growth of cement consumption in the coming months, particularly in the housing sector, may decline.

“Overall, we foresee challenging times ahead, in respect of markets, investments and input costs. However, ACC is continuing various programmes to improve operational efficiency and reduce operating cost and capital expenditure to counter these uncertainties,” Mr Banerjee added.

The company stocks in the Bombay Stock Exchange were down 2 per cent at Rs 443 on Thursday.