Factors that dented JK Lakshmi's profit in Q1
After posintg significant decline in profit in Q1, JK Lakshmi Cement said, it is consistently working on efficiency parameters to imporve performance.
Cement makers are certainly having a tough time with most companies posting weak set of numbers in Q1. ACC, Ambuja Cements have already announced a drastic fall in bottomline during the quarter gone by.Heidelberg Cement swung into loss due to inability to hike price in tandem with higher input cost
The latest is JK Lakshmi Cement to post around 69 percent year-on-year decline in its June quarter profit to Rs 15.7 crore. The firm’s net sales also de-grew 14.5 percent to Rs 511.11 crore Y-o-Y.
What led JK Lakshmi post poor numbers in Q1
The firm has not been able to pass on higher input cost to consumers by way of price hike. The last we heard of a price hike was in January this year.
Due to scheduled election in next 15 months, demand has slowed down around 30 percent due to no infra and construction activities
Production declined around 14 percent along with a 5 percent dip in sales realization, especially in northern and western markets where the company mainly operates.
Given huge surplus, utilization rate of the industry has gone down to 75 percent, down 21 percent in FY11.
Power, fuel and freight costs are major cost components of the cement industry. These together may accounted for about 60 per cent of the total cost in current year.
Demand offtake remained weak during the quarter and it was further impacted due timely monsoon arrival across the country.
However, situation will change going ahead, believes the company.
In a statement post earnings, JK Lakshmi said, work on its ongoing new 27 lakh tonne per annum project at Durg in Chhattisgarh has resumed after stoppage of about 3-4 weeks consequent to local disturbances in April. The company has also undertaken two more projects. Both these projects are expected to be completed by the end of the current financial year, it said.