The Hindu Business Line : ACC net down 22 pc on rise in input costs

Mumbai, July 24 Bogged by steep rise in input cost, cement major ACC has reported 22 per cent fall in net profit at Rs 271 crore in the quarter ended June 30, against Rs 346 crore registered in the same quarter last year.

Sales volume remained flat at 5.29 million tonnes (5.36 mt) in the quarter under review, while the turnover was down 3 per cent at Rs 1,822 crore (Rs 1,868 crore).

On a consolidated basis, the company’s net profit dipped 27 per cent to Rs 255 crore (Rs 349 crore), while the turnover rose marginally by 1.52 per cent at Rs 1,920 crore (Rs 1,891 crore).

Mr Sumit Banerjee, Managing Director, said production and despatches from two plants in Rajasthan were affected due to the recent agitation (by Gujjar community demanding reservation).

Fuel costs alone rose 40 per cent to Rs 401 crore (Rs 288 crore) in the June quarter. The Government taxes and duties were up 15 per cent while cement prices were up only 4 per cent. The quarter saw an unprecedented increase of 24 per cent in the cost of principal inputs including coal, power, fly ash and gypsum, Mr Banerjee said.

While the input cost has gone up substantially, the company has not been able to pass on the cost to the end consumer due to the Government pressure on the cement sector to hold the price line, said an analyst.

Ready mix concrete (RMC) business continued to remain in the red posting a net loss of Rs 13 crore against Rs 9 crore; profit from cement sales fell 18 per cent to Rs 437 crore (Rs 536 crore)

Dividend

The board has recommend an interim dividend of Rs 10 per equity share. The record date for the dividend will be August 1 and the dividend will be paid from August 12, the company said.

Mr. A.L. Kapur, Managing Director, Ambuja Cements, has resigned from the board without citing reasons.

The major projects being implemented by the company include expansion of capacity at Bargarh, New Wadi and Chanda. These projects together will add 7.2 million tonnes of capacity raising the company’s installed capacity to 30.4 million tonnes by 2010, the company said.

Our Chennai Bureau adds:

Cement industry experts, however, do not see ACC’s performance or for that matter only a marginal increase in Ultratech Cement’s net profit as an indicator of the sector’s performance.

With a request not to be quoted, the experts said the performance of ACC, Ultratech and Shree Cement Ltd, all three in the western region, can be attributed to a number of factors – local market conditions, inability to raise prices and ban on exports.

Ultratech’s profit after tax was up 2 per cent and Shree Cement’s down by 5 per cent over the corresponding period last year.

In the case of Ultratech, cement sales were up 4 per cent at 3.81 million tonnes while Shree Cement’s were up nearly 25 per cent at 1.7 million tonnes.

Cement companies have been faced with rising input costs. For instance, price of imported coal has more than doubled on a year-on-year basis, from about $ 80 a tonne for the same period last year to about $ 175 now. Ultratech said that its variable costs alone were up 19 per cent in the April-June 2008 period over the corresponding quarter last year.

The experts said that cement manufacturers such as ACC and Ultratech did not have much headroom to increase selling price of cement, while those in the South have been able to.

The first quarter results of the leading southern manufacturers, mainly India Cements Ltd and Madras Cements Ltd, are yet to be announced

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