Pressure on prices, slack demand drag India Cements Q3 net down

India Cements Ltd has reported a net profit of Rs 21.47 crore on net sales of Rs 780.99 crore for the quarter ended December 31, 2010.

During the corresponding period in the previous year the company reported a net profit of Rs 34.80 crore on net sales of Rs 864.12 crore.

Pressure on prices and a slack demand have contributed to the drop in net profit, according to Mr N. Srinivasan, Vice-Chairman and Managing Director.

During the quarter, clinker production dropped to 16.88 lakh tonnes (21.66 lakh tonnes), which represents a capacity utilisation of about 60 per cent for the company which has a total production capacity of about 14 million tonnes cement annually.

A significant development is that it is ‘back in black' after the losses it reported in the second quarter of the current year when realisations hit a low.

Mr Srinivasan said realisation during the third quarter picked up to Rs 2,900 a tonne against Rs 2,200 in the second quarter when large expansions went on stream. The ‘capacity overhang' continues to pose a threat but is bound to be absorbed in time.

India Cements has invested Rs 22 crore in Coromandel Minerals Pvt Ltd, a Singapore subsidiary, to acquire coal mine leases in the region. Coal supply from Indonesia, where India Cements has license to operate a mine, is expected to start from June, company officials said. The Mahi cement plant in Rajasthan, belonging to another subsidiary Indo Zinc, has started commercial production from February 1. This will give the company reach to the markets in Gujarat, Rajasthan and western parts of Madhya Pradesh.

The company's shares closed at Rs 89.90 on the NSE against the previous close of Rs 89.90.