HeidelbergCement India posted a net profit this quarter versus a loss in the earlier quarter as a boost from pick up in construction activity boosted earnings.
The sales for the company in the third quarter of FY18 were up 25 percent at Rs 483.8 crore versus Rs 387.8 crore for the corresponding quarter of last fiscal. The year on year (YOY) Q3 sales volumes were up 16.5 percent and the operating profit was up 93 percent.
The margins for Q3FY18 stood at 15.6 percent compared to 10.1 percent YoY.
Jamshed Naval Cooper, MD & CEO, HeidelbergCement India said the good performance was because of the waste heat recovery plant that started giving good results. Moreover, the fuel stock with the company helped them take care of increase in fuel costs.
However, going forward the rise in fuel and pet coke prices will lead to some pressure but they will try to manage the fuel and power cost in a better manner, he said.
He is confident that they will try to keep the margins around 16 percent and in fact improve them on back of increased efficiencies within the plant. Therefore, as volumes go up, the fixed costs may come down.
Talking about demand, Cooper said there was major improvement in Central India compared to last year. Even in the state of Uttar Pradesh, the demand is improving. Demand is more from the rural housing sector, he added.
For them the EBITDA/tonne is Rs 680/tonne, which would improve going ahead, said Cooper.
The company has seen price increases in January and in February to they have gone up although not consistently but are inching up. So, pricing power will continue, said Cooper.
The industry capacity utilisation currently is around 73-74 percent and for the company, it has been 88 percent. For the next 12-18 months the company can manage an added capacity utilisation of 5-7 percent, said Cooper.
With regards to debt, he said currently the net debt stands at Rs 500 crore and in the next fiscal year they would pay off Rs 150 crore, so it would be around Rs 350 crore next fiscal.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
