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Fall in 3Q profit for India Cements

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World Cement,

India Cements Ltd has announced its results for the third quarter of the current fiscal year (ending 31 December 2013).

Third quarter highlights

  • Cement production saw an 8% y/y decrease to 2.203 million t in the third quarter of the current fiscal year from 2.405 million t in the same quarter a year earlier.
  • Sales volumes stood at 2.294 million t, compared to 2.415 million t in the same period a year earlier.
  • An increase in cost-push, together with volume loss, resulted in an EBIDTA of Rs.146 crore, compared to Rs.196 crore in the same quarter of the previous year.
  • Interest charges were higher at Rs.80 crore against Rs.71 crore in the previous year, while depreciation was marginally lower y/y at Rs.69 crore against Rs.71 crore.
  • The Foreign Exchange Translation difference resulted in a gain of Rs.3 crore against a charge of Rs.11 crore in the same quarter of the previous year, resulting in a nominal profit of Rs.42 lakh for the third quarter of the current fiscal year compared to a profit before tax of Rs.43 crore in the previous year.

Nine month highlights

  • The total turnover for the nine months ended 31 December 2013 stood at Rs.3373 crore as compared to Rs.3417 crore in the previous year.
  • The net plant realisation was lower by Rs.240/t (or an erosion of Rs.174 crore on the bottom line). Consequently, EBIDTA was lower at Rs.475 crore, against Rs.686 crore in the same period in the previous year.
  • Interest charges were higher y/y at Rs.228 crore, compared to Rs.218 crore, while depreciation was at Rs.205 crore against Rs.210 crore. This resulted in a profit before exceptional item of Rs.43 crore, compared to Rs.258 crore in the same period a year earlier.
  • The power plant at Vishnupuram has started functioning and has stabilised at its full capacity levels.


The Indian economy continues to remain weak with tough macroeconomic conditions. Data released by the Ministry of Commerce and Industry indicated that cement demand grew by 1.1% in December 2013 and by around 3% for the nine month period ended 31 December 2013. This weak growth in demand exerted continuous pressure on the selling prices of cement, squeezing the margins of the industry in general. On the other hand, the industry also has to bear substantial increases in input costs, revisions in railway freight, high power tariffs and the steep increase in the exchange rate coupled with monthly increases in the price of petroleum products.

The sluggish growth in GDP is unlikely to revive in the current year with a consistent slowdown in demand, high lending rates, high inflation and uncertainty over policy direction with the ensuing General Elections. The Central Statistics Organisation has anticipated that GDP growth in the current financial year will be around 4.9%. The World Bank also expects the economy to record an 11-year low growth rate of 4.8% in the current year, down from 5% in the previous year. This figure has now been revised to 4.5% in the latest estimates by CSO.

The largest economic concern is the continued stagnation in industrial output, predominantly due to the slump in manufacturing activity. Construction activity is expected to remain subdued with no major pick up in infrastructure projects and housing demand. Improvement in exports and rural consumption hold the key to recovery.

Adapted from press release by Rosalie Starling

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