The India Cements (INDIACEM) Q4 97/98 earnings summary

Executive summary

• FY98 cement capacity expansion through Dalavoi commissioning and Yerraguntla and Raasi acquisitions lifted group capacity to 6.6 Mt, including Visaka under construction; standalone capacity reached 3.9 Mt.

• Operating profit before interest and depreciation rose to Rs.19,664.11 lakhs from Rs.17,400.72 lakhs, while PAT declined to Rs.5,826.09 lakhs from Rs.8,258.16 lakhs.

• A 30% equity dividend was recommended; medium- and long-term cement industry prospects were viewed as bullish amid improving prices and consolidation.

Financial highlights

• Sales and other income Rs.92,730.70 lakhs vs Rs.83,249.53 lakhs; total expenditure Rs.86,467.31 lakhs vs Rs.74,995.04 lakhs.

• PBT Rs.6,276.09 lakhs vs Rs.8,258.16 lakhs; PAT Rs.5,826.09 lakhs vs Rs.8,258.16 lakhs, after Rs.450 lakhs minimum alternate tax provision.

• Interest and other charges increased to Rs.8,489.34 lakhs from Rs.4,841.91 lakhs; depreciation rose to Rs.5,024.01 lakhs from Rs.4,406.63 lakhs.

• Cash generated from operations was Rs.15,155.02 lakhs; operating cash flow after interest and taxes was Rs.6,308.31 lakhs before extraordinary items.

Outlook and guidance

• Q1 FY99 cement production rose 22% to 9.17 lakh tonnes and sales rose 26.1% to 9.37 lakh tonnes YoY; rising cement prices from April 1998 supported expectations for improved profitability.

• Dalavoi stabilized at rated capacity by March 1998 and was operating above rated capacity at the report date; Yerraguntla began production on 14 April 1998 after refurbishment.

• Visaka’s 0.9 Mtpa Tandur plant was expected to start production before end-September 1998; cement productivity and energy savings were expected to improve further.

• The rights issue was expected to open in August/September 1998; anti-dumping measures on imported calcium carbide were expected to support improved subsidiary profitability.