The India Cements Limited Q4 and Year End 2014 – 2015 Result Highlights

According to the information available from DIPP, the growth in cement production during the first half of the year was at 9% which drifted down to 3% in the 3rd quarter and registered a negative growth of 2% in the 4th quarter indicating the trend of poor demand growth finishing the year with meager 5% increase in production. Even this marginal growth was possible through east and west while south registered a marginal negative growth with de-growths in Tamil Nadu and Andhra Pradesh. With the huge supply overhang, this affected the capacity utilization of the industry in general which was around 70% on an all India basis while it was sub 60% in the south. The industry was also saddled with ever increasing cost in input materials by way of freight, royalty increase, etc. and compounded by an additional dosage of royalty by the new Mines and Minerals Development Regulation ordinance. However, there was some marginal relief by way of reduction in petroleum products prices and in the imported coal cost and with an improved sales realization in the market, the company could achieve a reasonable bottom line despite the poor capacity utilization on account of the above factors.

 

Highlights of performance – IV quarter 14-15 Vs IV quarter 13-14

• The total sales volume including clinker was lower at 20.94 lakh tons against 26.54 lakh tons. 
• Variable cost of operation was higher on account of input material cost including royalty, increase in power cost and was up by 5% during the quarter. This was offset by improved net plant realization and resulted in a higher EBIDTA of Rs.200 crores against Rs.119 crores in the previous year. 
• The interest and other financial charges were higher at Rs.106 crores against Rs.79 crores due to increase in working capital and other facilities and one time charges while depreciation was lower at RS.59 crores against Rs.72 crores. 
• The resultant net profit before extra-ordinary items was at Rs.35 crores against a loss of Rs.31 crores in the same quarter of the previous year. 
• While forex gain remained the same at Rs. 1 crore, the previous year saw extra ordinary items by way of FSA charges and ROR adjustments of Rs.127 crores and consequent profit before tax was at Rs.37 crores for this quarter against a loss of Rs.157 crores in the previous year. 

 

Sequential Quarter – IV Quarter Vs III Quarter of Current Year

• Overall volume was at the same level at 20.94 lakh tons against 21.07 lakh tons. 
• NPR was up by 5% and variable cost was lower by 1%. 
• With improved NPR, the EBIDTA was at Rs.200 crores against Rs.163 crores . 
• Interest charges were higher by Rs.2 crore while depreciation was lower at Rs.59 crores against Rs.66 crores. 
• After recognizing the forex gain of Rs.1 crore during the quarter against a loss of Rs.5 crores in the preceding quarter, the net profit before tax was at Rs.37 crores against net loss of Rs.12 crores in the 3 rd quarter of the year. 

 

OUTLOOK:
Major global markets are showing weak recovery. It is only the US that is posting a stable growth. Global agencies like IMF and World Bank are expecting the Indian Economy to achieve a GDP growth of 7.5 % in the current year. Domestic demand and construction activity are expected to pick up in the coming months with improved macro-economic conditions and Union Budget thrust on increased public spending, more investments in infrastructure, focus on building smart cities, concrete roads , mass housing programme and allocation of more resources to the States. Renewed economic activity is also expected in the two bifurcated States, Telengana and Andhra Pradesh. Andhra Pradesh has big plans for building a new Capital city. In view of these developments, a cautious optimistic view may be taken for cement demand to pick up in the coming months.