The Hindu Business Line : India Cements 9-month net up at Rs 310 cr; losses wiped out

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Chennai, Jan. 22 India Cements Ltd has reported a net profit of Rs 310.87 crore for the nine months ended December 31, 2006. With this, the company has wiped out accumulated losses, which stood at Rs 262.53 crore at the beginning of the year.

Mr N. Srinivasan, Vice-Chairman and Managing Director, India Cements, told reporters that buoyant cement prices, growing demand and a tight rein on expenditure contributed to the company's performance.

Demand for cement was growing at 10 per cent across the country with the markets in the south growing at about 11.8 per cent. The growth in demand is expected to sustain in the coming months boding good for cement companies.

India Cements, which is looking at growth in the business, is well set to meet its expansion from internal accruals over the next couple of years. The company is planning a 20-lakh-tonne greenfield project in Himachal Pradesh and is planning on more cement production in other sites in the North to have a pan-India presence. It holds mining licences in Rajasthan and other locations, he said responding to questions on other production sites that the company is considering.

The Himachal Pradesh project will go ahead as provided for in the agreement though there are no firm schedules for now as some issues of local infrastructure like power availability and road widening need to be addressed first, he said.

India Cements expects to add about 20 lakh tonnes at its existing facilities by the year-end. The increase will come from upgradations and conversions of its existing facilities including the Sankaridurg Unit, which will soon be a modern dry process plant. These are being funded from the $75-million FCCB issue made in May 2006, Mr Srinivasan said.

India Cements is working to full capacity, which accounts for the small increases in production during the quarter. Its output now ranges around 75 lakh tonnes a year. At current capacities production increases could also come from increasing blended cement output. Over 57 per cent of its production is blended cement against 51 per cent last year. Further increase in production would depend on fly ash availability and market acceptability, Mr Srinivasan said.

Up to December 2006 India Cement produced 54.99-lakh tonnes (52.99 lakh tonnes) cement, about 3.8 per cent higher than the corresponding quarter in the previous year. Cement sales were also higher by 3.3 per cent at 54.74 lakh tonnes (53.01 lakh tonnes).

With the company on a firm wicket, Mr Srinivasan was optimistic on the company's performance in the coming year.

Its long-term debt was about Rs 1,000 crore and the debt-equity was 0.89 - taking into account the FCCB it was 1.17 and would be less than one in March.