HeidelbergCement India (500292) Q4 03/04 earnings summary

Executive summary

• FY03-04 sales were affected by weak cement prices, Damoh power disruptions, wagon shortages and working-capital constraints; capacity utilization remained 95%.

• Net loss widened to Rs.3,609.60 lakh from Rs.2,444.32 lakh; accumulated losses exceeded net worth, triggering steps toward a BIFR reference.

Financial highlights

• Gross sales were Rs.413 crore versus Rs.424 crore; net sales were Rs.33,289.60 lakh versus Rs.34,897.40 lakh.

• Loss before tax was Rs.3,556.74 lakh versus Rs.3,566.00 lakh; loss after tax was Rs.3,609.60 lakh versus Rs.2,444.32 lakh.

• Other income was Rs.1,383.34 lakh versus Rs.502.97 lakh, including Rs.748.44 lakh from a machinery-supplier arbitration settlement, net of related write-offs and costs.

• No dividend was recommended due to the loss.

Outlook and guidance

• Cement prices began recovering in Q4 and the improvement continued in Q1 FY04-05; productivity, plant efficiencies and cost controls were also improving.

• Industry growth was expected to reach ~8% in FY04-05, supported by housing, roads and other infrastructure investment, alongside a normal monsoon outlook.

• Sponge iron production was expected to contribute positively to results; further value addition through conversion into ingots was under review.