Leading cement manufacturer The India Cements Ltd. (ICL) has posted a standalone net profit of ₹8.72 crore for the second quarter ended September 2019, due to improved realisation on sale of cement and reduction in cost of power and material, among others.
This compares with a lower ₹1.43 crore net a year ago but a significantly higher ₹72.21 crore for the quarter ended June this year.
In the recently closed quarter, the company’s capacity utilisation declined to 68% from 77%. Overall, cement and clinker volume for the quarter declined to 26.67 lakh tonnes from 30.77 lakh tonnes.
India Cements’ total income declined to ₹1,284.94 crore from ₹1,390.84 crore due to a sharp fall in demand in Andhra Pradesh and Telangana.
“The cement market was languishing a bit in the South. There was a steep fall in demand in Telangana and Andhra Pradesh,” said N. Srinivasan, vice-chairman and MD , The India Cements Ltd.
He added that together, Andhra Pradesh and Telangana used to witness about 2.1 lakh tonnes per month in sales but that the figure had recently plunged to 1 lakh tonnes per month.
“We are waiting for the markets to revive and will sell in places other than A.P. and Telangana. Over the next five months, we will optimise the volume to make up for what we have lost. We will get into aggressive sales when the prices are good,” he said.
Asked about the next few quarters, he said ICL expected Q3 to be better than Q2, while expecting a better fourth quarter due to expected pick-up in demand for infrastructure projects.
Mr. Srinivasan said that despite the tough market conditions influenced by lower demand, ICL was able to post a profit before tax (PBT) of ₹113 crore for the first six months of the current fiscal against ₹28.12 crore for the corresponding year-ago period.
For FY19, India Cements recorded PBT of ₹93.42 crore.
Input costs to stay muted
He added that he expected input costs to remain tempered due to the anticipated softening of fuel prices and the company’s planned reduction of manpower.
As of October 2019, ICL had a non-management workforce of about 1,200 , which was expected to halve by 2022 as per an understanding with the unions, he said. He added that the company planned to focus on multi-skilling of its staff.
