Special Correspondent

A strong demand in A.P. and Karnataka aided the performance

Company confident of wiping out accumulated losses in Q3Plans sharp reduction in debt

CHENNAI: India Cements has reported a net profit of Rs. 112.59 crore for the quarter ended June 30, 2006, up from Rs. 5.21 crore in the same quarter last year.

"This profit figure far exceeds even the highest ever annual profit registered by the company at Rs. 87 crore during 1998-99,'' said N. Srinivasan, Vice-Chairman and Managing Director of the company.

The company has recorded net sales of Rs. 561.82 crore during the quarter under review, up from Rs. 452.09 crore in the same quarter last year, recording a 25 per cent jump.

Addressing a press conference here on Monday, he said the company was hopeful of wiping out its accumulated losses by the third quarter of this year. The confidence stemmed from good demand in its major markets and continued firmness in prices, he said. He expected the current bullish trend to last at least two-to-three years.

The accumulated losses as on March 31, 2006 stood Rs. 260 crore. This figure, he said, would come down to Rs. 150 crore at the end of the first quarter.

A strong demand and firming prices in Andhra Pradesh and Karnataka contributed significantly to the strong performance of the company. The total debt of the company stood at Rs. 1,280 crore. Out of this, about Rs. 500 crore would form part of the corporate debt-restructuring scheme that the company had undertaken. A substantial portion of this high-cost debt would be repaid during the year.

Currently, the average cost of borrowings for the company worked out to 10.5 per cent. Since it went through a difficult phase not long ago, the company could not go in for credit rating. Now that it had turned around, Mr. Srinivasan was confident of getting better rating and accessing cheaper funds. "We have said that by March 2007, our debt will be less than our equity," he said. The debt equity ratio is currently at 1:1.16.