India Cements Ltd. (ICL) has reported a big jump in its net profit for the first quarter ended June 2011 to Rs. 102.03 crore, up from Rs. 24.98 crore in the same quarter last year. Significantly, the first quarter net profit was substantially higher than the net profit of Rs. 68.10 crore that the company had reported for the entire 2010-11.
For the quarter under review, the company has reported total revenue of Rs. 1061.72 crore, up from Rs. 909.16 crore in the same period last year.
The earnings before interest, depreciation, tax and amortisation increased to Rs. 246.58 crore during the quarter under review, up from Rs. 128.53 crore in the same quarter previous year.
A combination of factors ranging from higher price realisation to efficiency measures has largely aided the company to post a strong PAT number for the quarter.
The PAT number is significant especially if read in the context of a drop in production and sales. Clinker production was lower at 17.07 lakh tonne during the quarter ended June 2011. Cement sale, too, was down to 23.11 lakh tonne from 26.52 lakh tonne in the same quarter last year.
Addressing a press conference in Chennai on Friday, N. Srinivasan, vice-chairman and managing director, asserted that price was more important than volume in the cement industry. “We have decided to sell cement at a meaningful price whatever be the production,” he pointed out. He insisted that it served nobody’s cause to sell at an uneconomic price.
The cement industry in the South, he said, had shown a 7.7 per cent decline in demand. The demand growth at all-India level was flat at just below 2 per cent. Given the current environment, he did not expect any demand pick-up in the near-term. However, he was confident that the demand would not dip below the current level. The demand trough had seen capacity under use across the industry, he pointed out.
Fielding a range of questions, Mr. Srinivasan said the company had fully redeemed foreign currency convertible bonds worth $75 million during the quarter under review. The total debt of the company now stood at around Rs. 2,000 crore, he added.
He also hinted at the possibility of India Cements exporting cement. “The window for exports is opening up,” he said. He, however, did not elaborate on this.
