Capacity utilisation for new plants at around 55%: Shree Cement

HM Bangur, Managing Director, Shree Cement, while detailing the second quarter performance ended December, 2015 said the volume growth was higher by 23% from the year ago period and the per tonne realisation was lower by 1 percent. The total cement revenue growth increased 22% to Rs 1645 crore from Rs 1350 crore reported for the same quarter last year, he said in an interview to CNBC-TV18.  For the power division, the volume growth was around 10 percent in spite of lower power prices as they were offset by lower cost of fuel.Cement capacity utilisation for the quarter came down from 88 to 77 percent because of addition of new units. The new plant capacity utlilisation currently stood at around 55 percent.For Q3, the cement volumes are likely to be in the similar range as that of Q2 but were 25 percent higher compared to last year. However, it is difficult to give realizations for the third quarter (January to March), said Bangur.According to Bangur, the cement prices are lower compared to last year. Below is the transcript of HM Bangur’s interview with CNBC-TV18's Reema Tendulkar and Mangalam Maloo.

Reema: First could you give us some numbers what the volume growth was in this quarter as well as what your realisations were and how would it compare with a year ago?

A: Year ago our volume growth is higher by 23 percent plus some realisation is lower by one percent, so the total cement revenue growth has increased to 22 percent. From Rs 1,350 crore last year the revenue have increased to Rs 1,645 crore that is 22 percent higher. That is why the earnings before interest, taxes, depreciation and amortisation (EBITDA) of cement level have increased roughly 34 percent but you will see a loss on the net number in the cement division because of very high depreciation and as far as power division is concerned our volume growth is 10 percent and the prices of power have come down from Rs 3.90 to Rs 3.36 that is 14 percent down. Still because of the lower cost of fuel our EBITDA in power have increased to Rs 50 crore from above Rs 24 crore last year.

Mangalam: But could you give us a sense of what were the cement capacity utilisations during the quarter and at the same time what capacity utilisations were your new plants functioning at?

A: Cements capacity utilisation had come down because of addition of new unit. The volumes are higher by 23 percent and as we have created new capacity our capacity utilisation have come down from 88 percent to roughly 77 percent.