The Hindu Business Line : Strong sales but sedate profit growth from India Cements

India Cements has posted strong growth in revenues for the March quarter, with strong sales growth and “other income” contributions by way of sponsorship fees from IPL, but profit growth has failed to keep pace.

India Cements has closed the March quarter with a 9 per cent rise in sustainable net profit. Reported PAT took a hit due to one-time loan settlement of Rs 48 crore. For the quarter, profit before interest, depreciation and taxes recorded a 28 per cent growth.

This has been helped by strong sales growth and “other income” of Rs 32 crore for the quarter, mainly from sponsorship fees from IPL. India Cements managed strong sales growth for the quarter with a 70 per cent increase in net sales. While the company appears to have beaten the 12 per cent demand growth in the region, realisations were also probably helped by cement selling prices hovering around Rs 250-55 a bag, against the national average of Rs 230 a bag. The PBIDT margin, however, registered a decline, on higher fuel expenses, with fuel costs up 62 per cent year-on-year.

PAT margin

The PAT margin too was dented by 8.7 percentage points on a year-on-year basis, with higher depreciation and tax incidence in the quarter taking a toll.

The company had bought two cargo ships during the quarter as a part of its Rs 1,450-crore capex plan. Interest costs for the quarter declined and may trend lower in the coming quarters, with the one-time loan settlement. The positive highlight for the company, however remains the stronger demand potential of the region and its flexibility on prices.

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