India Cements Q4 net down 60% on higher power cost

Moneycontrol Bureau

India Cements has posted an around 60 percent year-on-year decline in its March quarter profit to Rs 26.28  crore as the Chennai-based firm could not pass on higher power and logistics costs to consumers.

While power cost went up 8 percent to Rs 341 crore, transportation cost also rose 30 percent to Rs 274 crore. Sales, however rose over 6 percent to Rs 1190.54 crore on improved volumes.

For FY13, the company's net profit fell 31 percent to Rs 188 crore. Sales, however grew 11.4 percent YoY to Rs 5159 crore.

The company has been facing challenges operationally, especially on the cost front. Its numbers were impacted due to hefty power holidays and subdued cement demand, say analysts.

Like its peers, India Cements is also gearing up for revival in demand on the back of elections to be held across states in 2014. It will also be benefitted if the Reserve Bank of India cuts interest rates next month, which will boost infra spend by corporates.

Meanwhile, the southern cement industry which has the highest capacity in the country, has been striving hard to access northern and  eastern markets in the interest of improving the capacity utilization, but is constrained due to rail rakes availability. Given that supply-demand imbalance in south market is relatively higher, it is expected that demand will catch up with supply by 2014-15, which is expected to boost India Cements.

Shares of the company rose around a percent to Rs 86.55 post Q4 earnings announcement.

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