Cement prices, floods impacted growth in Q1 of FY17: KCP

KCP reported disappointing first quarter numbers with a 12 percent fall in total income to Rs 182.4 crore while its operating profit reduced to Rs 30.42 crore, a 45 percent fall. Operating margins contracted to 17 percent from 27 percent in year-ago period.Speaking to CNBC-TV18, GN Murty, CFO of the company said that the bottomline was impacted due to an extraordinary item of Rs 3 crore on back of floods in Chennai.Margin contraction in the cement business was a result of a fall in cement prices in April this year. However, the volumes improved to 4.2 lakh in first quarter, he says. Margins and volumes both are expected to grow at similar levels in future, Murty says. Below is the verbatim transcript of GN Murty's interview to Sonia Shenoy & Anuj Singhal.

Sonia: The margins for the company have fallen substantially at a time when a lot of your bigger peers in the same business are seeing power and fuel cost fall; your power and fuel cost have actually risen almost about 8 percent odd. What explains that and do you more pressure on margins?

A: In fact the margins side, they are more or less equivalent to quarter four of the last year. The margin trend is in the similar line of quarter four of last year but the extraordinary item, if you see about Rs 3.50 crore we incurred on the engineering units due to floods that is reflecting on the bottomline. Otherwise margins are like-to-like compared to quarter four.

On power front also we are doing more or less similar to quarter four but quarter four we had some advantage of exporting power. Now the power is surplus in the state, so there is no way we can export that kind of power. However, still we are trying to use our power to other units elsewhere by taking the approvals.

Anuj: May be what Sonia was referring to was specifically for the cement business where even the revenues have degrown and of course the margin pictures looks quite bleak there, could tell us about that as well.