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India Cements posts lower net profit

CHENNAI: Despite posting higher gross turnover of Rs. 3,954.53 crore (Rs. 3,595.48 crore) during 2008-09, India Cements has reported a lower profit after tax of Rs. 432.18 crore against Rs. 637.55 crore in 2007-08.

The drop in profit is attributed primarily to a higher depreciation charge of Rs. 203.32 crore (Rs. 127.92 crore) and an exceptional expenditure of Rs. 79.43 crore (against a gain of Rs. 10.13 crore in the preceding year) due to foreign exchange translation.

Addressing a press conference here on Saturday, N. Srinivasan, Vice-Chairman and Managing Director, said the rise in input costs due to escalation in the prices of coal and gypsum had been made up by higher price realisation. The average price realisation for the company stood at Rs. 4,116 tonne against Rs. 3,836 a tonne in the previous year. The board, he said, had approved a dividend of Rs. 2 per share of Rs. 10 each for 2008-09, same as previously.

The board had also approved a proposal for raising up to $100 million either from the domestic or global markets. “This is more an enabling resolution,” Mr. Srinivasan said.

With the company lining up a capital expenditure programme of Rs. 1,500 core over the next two years or so, board approval was taken more in the nature of a back-up option, he said. “We can do it through internal generation,” he said.

Mr. Srinivasan said that India Cements would have to be an integrated cement producer if it were to have greater control over input costs. In this context, he said the company had already set up a subsidiary in Indonesia to acquire a private coal mine in that country.

“We have identified the coal mine there. Technical due diligence is over. We will do the legal due diligence of the coal assets,” he said.

He also indicated that the company would not be averse to acquiring gypsum assets, as they formed a critical component of cement production.

Mr. Srinivasan said “the current year would be okay”. Though new capacities were being put up by cement companies, there could be delays in capacity additions due to assorted factors. His optimism on the demand front this year was based on this factor.

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