Worst is over, says MD; firm plans new cement plant in M.P. with investment of up to ₹1,000 crore
The India Cements Ltd. (ICL) reported a 93.96% drop in its standalone net profit for the second quarter ended September 2018 to ₹1.43 crore on account of a steep increase in the prices of fuel and depreciation of the rupee. This compares with a ₹23.67 crore net profit registered a year-earlier.
“The tough cement market conditions in the south coupled with a steep increase in fuel and power prices along with depreciation of rupee affected the operating performance during the quarter,” N. Srinivasan, vice-chairman and managing director, told the media.
According to him, the loss on account of foreign exchange fluctuation was ₹12 crore. Interest and other charges were ₹84 crore (₹89 crore). The resultant profit before tax stood at ₹1.4 crore against ₹36 crore.
During this period, ICL sold 30.77 lakh tonnes of cement, up 13.92%. Total income increased by 9.09% to ₹1,390.84 crore (₹1,274.90 crore). “Despite all this, ICL managed to do well in this difficult quarter through increased volumes coupled with stringent control on the fixed cost and selling and distribution expenses,” he added.
Going forward, ICL felt that there would be a pick up in cement demand due to increasing consumption by infrastructure, irrigation, private and affordable housing projects.
“The worst is over and we expect the market to pick up. We had a capacity utilisation of 77% compared with 70% in the same quarter last year. We expect to run at full capacity during the fourth quarter,” he said.
‘Last difficult quarter’
Asserting that the next three to four years would see outstanding position in the cement industry, he said “It is a matter of time before the prices rise.
“The October-December period would be the last difficult quarter with the following quarter seeing some relief. Prices would be better from the April-June quarter onwards,” he said.
ICL has entered into share purchase agreement for acquiring the entire shareholding of Springway Mining Pvt. Ltd. in a phased manner for a total cost of ₹182.89 crore.
The acquisition is being done with an objective to set up a cement plant of 2.5 million tonnes per annum in Madhya Pradesh at a cost of ₹900 crore to ₹1,000 crore. After the expansion, ICL’s total cement production capacity would increase to 17.5 million tonnes.
“The plant, which will cater to the demands of M.P., central and eastern Uttar Pradesh, will become operational by January 2021,” he said. M.S. Dhoni, captain, Chennai Super Kings and vice-president (marketing), was also present.
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