India Cements on Monday reported a robust recovery in its earnings before interest, depreciation, tax and amortisation (EBIDTA) for the second quarter ended September, 2011, notwithstanding the continued sluggishness in demand.
From a mere Rs.31 crore in the same quarter last year, the EBIDTA has jumped to Rs.255 crore for the second quarter this year. In the wake of this, it has reported a net profit of Rs.70 crore for the quarter under review as against a loss of Rs.34 crore in the same quarter last year.
This improved bottom line comes on top of a growth in revenue to Rs.1,092 crore (Rs.843 crore) during the quarter. However, production and sales were down. While production was down by 9 per cent at 24.23 lakh tonnes (26.64 lakh tonnes), sales were lower at 24.27 lakh tonnes (27.08 lakh tonnes) during the quarter under review.
Addressing a press conference here, Vice-Chairman and Managing Director N. Srinivasan said, “I am satisfied with the bottom line.'' The improved financial numbers were primarily due to higher price realisation. The average price realisation was Rs.3,428 a tonne during the second quarter, up from Rs.2,230 a tonne in the same period last year. During the first quarter of this year, the average price realisation was Rs.3,369 a tonne. Mr. Srinivasan said the capacity use of the company was around 68 per cent. In this context, he pointed to the excess cement capacity in the South. While cement capacity was in the vicinity of 100 million tonnes in the South, the demand was just around 55-60 million tonnes. To a question, he said “prices will hold'' in the current quarter too. He reiterated that the company would focus on profitability rather than the volume. The absence of investment flow into the infrastructure area, the rising interest cost and its fallout on retail home buyers, general lack of confidence and hesitancy on the part of coporates to borrow had all been having a negative impact on the demand growth, he said.