The woes of the cement sector have started to come to the fore as India?s leading cement manufacturer UltraTech Cement has seen its net profit for the second quarter dip by 12%, year-on-year, to touch Rs 64 crore. Rising input costs, flat realisations and a slowdown in the real estate sector have contributed to this dismal performance said the company statement.
The company?s net sales for the period stood at Rs 1,396 crore as compared to Rs 1,168 crore last year. Profit before interest, depreciation and tax for the second quarter of FY09 fell 9% to Rs 325 crore against Rs 357 crore in Q2 FY08. The domestic realisations of the company remained flat sequentially, it said. However, this fall is quite in line with analysts? expectation who had factored in the high input cost factor.
?A sharp increase in prices of coal and raw material resulted in variable costs rising by 37% compared to Q2FY?08. The short fall in Q2 on coal supplies against existing linkages compelled the company to increase coal purchase from the domestic market at a significantly higher price. The balance requirement was met through imports. Imported coal prices more than doubled to $ 190 pmt year on year. These developments have put pressure on the company?s operating margins via-a-vis the previous two quarters.? UltraTech said in a statement.
UltraTech?s shares on Friday were down 5.55% to close at Rs 375.80 on the Bombay Stock Exchange.
However, it was also noted that the decline in net profit was due to huge spurt in deferred tax that surged to Rs 21.05 crore in Q2 FY09 when compared with Rs 1.78 crore in Q2 FY08. On half yearly basis ending on September 30, 2008, the cement major reported a net profit of Rs 429.20 crore (Rs 445.24 crore) with a provision of deferred tax of Rs 72.90 crore (Rs 12.15 crore) on a turnover of Rs 2,892.19 crore (Rs 2527.58 crore). The company further mentioned that the recent fall in the dollar price of imported coal has been partly neutralised by the falling value of the rupee.
The company started commercial production of clinker from the expansion line at Andhra Pradesh Cement Works (APCW) and of cement from the cement grinding unit at Ginigera in Karnataka.
Upon complete commissioning of capacity at APCW, the total capacity of the company will increase to 23.1 mmt by end of end of the calendar year, the management said.