India Cements Turns Red With Rs 54-crore Loss

Chennai, July 30: | Updated: Jul 31 2002, 05:30am hrs
Poor realisation and heavy interest burden is pulling India Cements Ltd (ICL) deeper into the abyss. The company has registered a net loss of Rs 53.94 crore for the quarter ended June 30, 2002. This compares very poorly with the profit of Rs 11.61 crore in the first quarter of 2001-02, a period when cement prices were ‘maintained’ at comfortable level through controlled supply.

ICL, in the first quarter of the current fiscal sold 14.30 lakh tonnes (12.67 lakh tonnes), an increase of 13 per cent. But sharp fall in prices meant that the gross realisation per tonne dropped to Rs 2,072 from Rs 2,805. Consequently the sales (in value terms) fell by 17 per cent to Rs 297.94 crore (Rs 357.67 crore).

Margins at operating level took a massive hit on account of poor prices which shaved Rs 105 crore from the overall contribution for the period. The operating profit, as a result, crashed to Rs 23.87 crore from Rs 88.97 crore.

The interest cost continues to haunt the company. This, despite the sale of Sri Vishnu Cements proceeds of which went towards reducing the gearing. Interest for the quarter increased marginally to Rs 57.55 crore (Rs 57.20 crore). Poor cash flow is being attributed as one of the reasons. Depreciation was higher at Rs 20.26 crore (Rs 20.16 crore) on account of various upgradations.

With no sign of pick-up in prices and most manufacturers going after volumes to cover their variable cost, analysts opine that ICL may find ways and means to reduce its gearing and improve efficiency to get back into the profit zone.