The Hindu Business Line : ACC, Ambuja Cement net profits rise on lower input cost

Mumbai, Oct. 28 Holcim Group companies, ACC and Ambuja Cement, have posted a strong performance for the quarter ended September 30. While ACC showed a 60 per cent growth in net profit, Ambuja Cement’s rose 27 per cent.

ACC’s turnover rose nine per cent to Rs 2,077 crore (Rs 1,900 crore) in the quarter under review. Cement production was up three per cent to 5.01 million tonnes (mt).

Total expenditure fell three per cent to Rs 1,511 crore (Rs 1,551 crore) on the back of a 17 per cent drop in power and fuel cost at Rs 362 crore (Rs 441 crore) and 13 per cent in other expenditure to Rs 412 crore (Rs 475 crore).

The substantial dip in coal prices helped reduce production cost and make up for the fall in cement prices in various regions, said an analyst.

“The benefit of lower coal prices in reducing our manufacturing cost was partially offset by an increase in the cost of raw materials such as gypsum, slag and fly ash coupled with higher diesel prices and royalty on limestone,” said Mr Sumit Banerjee, Managing Director, ACC. Revenue from ready mix concrete business fell 13 per cent to Rs 118 crore (Rs 135 crore) which recorded a net loss of Rs 17 crore (Rs 21 crore). Profit from the cement business was up 50 per cent to Rs 625 crore (Rs 418 crore) and revenue rose 10 per cent to Rs 1,969 crore (Rs 1,791 crore).

Ambuja sales up

Ambuja Cement reported a 16 per cent rise in sales at Rs 1,611 crore (Rs 1,387 crore). The company produced 4.1 million tonnes (3.9 mt) of cement in the quarter. Sales in the domestic market were up nine per cent to 3.6 mt (3.9 mt), while exports halved to 1.50 lakh tonnes (3 lakh tonnes). The company earned Rs 17 crore by way of selling surplus captive power.

“Cement demand in the central and eastern regions was particularly strong, while the South saw a sharp slowdown, mainly in Andhra Pradesh,” said Mr A.L. Kapur, Managing Director. Export markets have turned weak with orders hard to come by and prices still unattractive, resulting in diversion of material to the domestic market, he added. Ambuja Cement has commissioned a 15 MW power plant at Maratha in Maharashtra while the second phase of captive power expansion at the Ambujanagar plant is almost complete.

“Pricing pressure has begun to appear in certain markets, particularly in the southern and central regions, and may persist into 2010. The recent hike in domestic coal prices will also put additional pressure on operating margins,” said Mr Kapur.

Shares of ACC and Ambuja Cement on BSE were down two per cent each at Rs 745 and Rs 88 on Wednesday.

Related Stories:
ACC net profit surges 85% in Q2; Ambuja Cements’ falls 44%
Marginal rise in ACC sales in June

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