The India Cements has reported a lower net profit of Rs. 34.80 crore for the quarter ended December 2009, down from Rs. 61.91 crore in the same period in the previous year. The company, however, has reported a higher operating income of Rs. 875.97 crore (Rs. 768.76 crore) for the quarter. Total expenditure, too, has gone up to Rs. 747.60 crore (Rs. 574.70 crore).
Addressing a press conference here on Monday, Vice-Chairman and Managing Director, N. Srinivasan, attributed the dip in net profit primarily to the drop in cement prices across the South. The average price realisation had dropped drastically from Rs.3,281 a tonne in April last to around Rs.2,200 in December 2009. Price realisation for the quarter under review was Rs. 2,400 a tonne, down from Rs. 3,087 a tonne in the year-ago period.
“Considering this huge price fall, we have done well because of the increased sales volume,” he said. Mr. Srinivasan, nevertheless, felt that prices “have bottomed out”. He felt that the next 12 months would see “lower prices than before”. Prices would, however, be better than “what is today,” he said. In Tamil Nadu, cement prices had dropped from Rs. 275 a bag (50 kg) to around Rs. 200. In Andhra Pradesh, prices were lower at Rs. 140 against Rs. 230 a bag.
Mr. Srinivasan said the scene had improved in December with the South registering a demand growth of 10 per cent. Andhra Pradesh saw a 10 per cent pick up in demand and Karnataka 12 per cent. Till December, Andhra Pradesh was showing a marginal negative growth in demand. Though domestic cement consumption grew by 13 per cent in the first nine months of the current financial year, the demand in the South grew only by five per cent. While the cement demand in Tamil Nadu grew by 12 per cent, it rose by 4.34 per cent in Kerala and by 3.5 per cent in Karnataka. Andhra showed a marginal negative growth in the first nine months of the current financial year.
Mr. Srinivasan said that a combination of factors ranging from excess capacity to panic selling and hard bargain by stockists had caused the precipitous fall in prices in the region.