CHENNAI: INDIA Cements is back in the black even as cement sales in southern market went south last fiscal.
With an uptick in monsoon, increase in public expenditure and domestic demand, the company hopes the worst will be behind the sector soon.
For the quarter ended March 2016, the sixth largest cement maker’s standalone net profit jumped to Rs 51.21 crore. It was Rs 36.60 crore in the corresponding period a year ago, but the figures aren’t comparable consequent to the firm’s hiving off of IPL franchise last fiscal. Total income rose to Rs 1,154 crore in March quarter. For entire fiscal FY16, standalone net profit shot up to Rs 137.81 crore from Rs 29.45 crore in FY15, while total income rose to Rs 4,248 crore.
“We have turned around. Going forward, we see improved performance with costs under control and demand trigger coming from an expected normal monsoon, increased infrastructure expenditure,” said N Srinivasan, vice chairman & Managing Director, India Cements.
This increase in expenditure is critical for the sector, which managed a wan 5% cross-country growth in FY16, while southern market saw de-growth. Bleak sales dragged pan-India capacity utilisation down to 73 per cent, while for south -- hit with supply glut -- it was sub 60 per cent. For India Cements, which runs 10 plants aggregating 16 mt capacity, utilisation stood at 60% in FY16.
According to Srinivasan, oil prices, which fell to the floor last fiscal, helped companies mitigate wage inflation. This coupled with lower fuel and variable costs, rising cement volumes at 24.03 lakh tonne, reduced interest charges of Rs 91 crore and depreciation of Rs 52 crore helped the company avoid red ink on its balance sheet.
Meanwhile, the board recommended a dividend of Rs 1 per equity share of Rs 10 each for FY16 and reappointment of Srinivasan as MD for 5 years.
L350 cr capex plan
India Cements has earmarked D350 crore capex spread over the next three years. It will be used to replace an existing grinding mill at Sankarnagar plant, TN. Funds will also be used to increase the usage of petcoke and pollution control equipment to minimise emission to reduce costs and improve capacity.