Financial Daily from THE HINDU group of publications
Tuesday, Oct 29, 2002
Madras Cements net dips on fall in realisation
CHENNAI, Oct. 28
MADRAS Cements Ltd has posted a net profit of Rs 1.09 crore on sales of Rs 158.17 crore for the quarter ended September 30, 2002 against a net profit of Rs 1.49 crore on sales of Rs 185.46 crore for the same period last.
For the half year ended September 30, 2002, the company's net profit was Rs 9.74 crore on sales of Rs 319.89 crore against a net profit of Rs 31.66 crore on sales of Rs 394.58 crore for the same period last year.
According to a company official, the fall in sales income is mainly because of a steep fall in average realisation per tonne of cement sold. For instance, during the quarter under review the average realisation was down by Rs 500 per tonne over the same period last year while for the first half of the current year, the drop was about Rs 300-400 per tonne over the first half of last financial year.
Cement production for the second quarter of this year was 9.26 lakh tonnes against 9.09 lakh tonnes for the same period last year. Cement dispatches were at 9.37 lakh tonnes against 8.91 lakh tonnes earlier, while cement sales were 9.64 lakh tonnes against 9.38 lakh tonnes during the second quarter of last year.
Despite this, the company was able to achieve a net profit of Rs 1.09 crore for the July-September 2002 period mainly because of the tight control on costs and overall productivity improvement, according to the official.
"From limestone excavation to distribution, every item of cost has been reviewed and drastic reduction made," said Mr A.V. Dharmakrishnan, Senior Vice-President - Finance.
For instance, power and fuel cost came down from Rs 49.92 crore during July-September 2001 to Rs 44.36 crore during the second quarter of this year. Transportation and handling expenses came down from Rs 30.54 crore to Rs 17.38 crore, while other expenditure dropped from Rs 33.85 crore to Rs 25.77 crore.
Mr Dharmakrishnan said that the company had almost completely switched over to using the road for transporting cement. And, within Tamil Nadu, Madras Cements had done away with moving the cement to godowns and from there to the dealers. Instead, cement bags were dispatched directly to the dealers from the plants itself, achieving significant savings.
The company sees a gradual firming up in cement prices with a reasonable growth in demand. However, the pressure on realisation is mainly because of increase in cement supply, according to the company.
Mr Dharmakrishnan said the company had also been able to bring down the working capital cost substantially. The average cost was 6.58 per cent against about 12 per cent last year. This had been made possible by mainly going in for short-term instruments with duration of 3-6 months.
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