Better realisation and pricing has contributed to India Cements reporting a net profit during the second quarter of the current year as compared with the losses of the corresponding quarter last year.
During the quarter ended September 30, 2011, the company reported a net profit of Rs 69.71 crore (net loss Rs 33.63 crore) on an income of Rs 1,089.06 crore (Rs 841.16 crore).
Interest charges were higher at Rs 65.17 crore (Rs 31.51 crore) on replacement of the FCCB of $75 million with debt, and higher working capital utilisation. The premium including withholding tax paid on redemption of FCCB was Rs 177.93 crore.
Addressing media persons on the company's performance, Mr N. Srinivasan, Vice Chairman and Managing Director, described the performance as ‘satisfactory' given the market conditions.
Realisation has picked up on better cement pricing with net plant realisation at Rs 3,428 (Rs 2,230) a tonne of cement. This realisation was also higher than that of the current year first quarter's Rs 3,369.
Low demand worrying
However, high costs of inputs including imported coal are a cause for concern.
Cement demand continues to be sluggish with all-India growth at a meagre 3 per cent while the normally high growth South has actually dropped into the negative, he said. Major sectors, including housing, that impact cement demand have been affected by high interest costs. Infrastructure projects are slow to take off.
This has resulted in a relatively low capacity utilisation of about 68 per cent for the company with a total annual cement production capacity of about 14 million tonnes. Cement production during the quarter was down 9 per cent to 24.23 lakh tonnes (26.64 lakh tonnes) and sales 24.27 lakh tonnes (27 lakh tonnes). The company expects to commission a 50 MW thermal plant at Sankar Nagar in mid-December.
The Chennai Super Kings, India Cements' Indian Premier League franchise, contributed revenue of Rs 138 crore in the first half, Mr Srinivasan said.