Ramco Cements (formerly Madras Cements) has posted a drop of 61% YoY in net profit to Rs 24.99 crore for the fourth quarter ended March 2014. The total income from operations saw an increase of 3% at Rs 985.09 crore for the quarter. The increase in operating expenses and subdued demand for cement due to slow market conditions contributed to a steep fall in bottom line.
Operating expenses of the Company was Rs 856.15 crore for the period, higher by 9% from Rs 786.15 crore in corresponding previous quarter, as input and logistics costs increased due to surge in railway freight and a continuous hike in diesel prices. As a result, operating profit margin (OPM) squeezed 480 bps YoY to 13.1%.
Performance for quarter ended March 2014
Ramco Cements total income from operation advanced 3% YoY to Rs 985.09 crore for the quarter ended March 2014.
The Operating Margin (OPM) contracted by 480 bps to 13.1%. The drop in OPM was due to surge in power & fuel cost by 280 bps to 22.9%, raw material cost by 190 bps to 18.2%, and employee benefit cost by 40 bps to 5.7% as percentage to sales and net of stock adjustments. However, other costs dropped by 40 bps to 16.7% during the period. As a result, the operating profit de-grew by 25% at Rs 128.94 crore.
Further, with 35% drop in other income to Rs 2.22 crore but 62% increase in finance cost to Rs 49.53 crore and 33% increase in depreciation to Rs 77.25 crore, the PBT declined steeply 95% to Rs 4.38 crore.
The Tax Expense for the quarter ended 31 March 2014 includes adjustment of MAT (minimum alternative tax) credit entitlement of Rs 22.93 crore arising from reversal of tax provision related to current and earlier assessment years. As a result, tax credit for the period was Rs 20.61crore which led the drop in net profit by 61% to Rs 24.99.
Annual Financial Performance
For the financial year ended March 2014, total income from operation of the company declined by 3% to Rs 3761.18 crore. On segment wise, revenue of the cement segment, which constitutes about 98% of total segment sales, fell by 2% to Rs 3692.94 crore and windmill segment which constitute about 2% of total sales revenue dropped by 24% to Rs 83.82 crore.
Operating Profit Margin (OPM) squeezed by steep 980 bps to 17%. This was due to incline in raw material cost by sharp 320 bps to 17.9%, freight & handling cost by 240 bps to 22.1%, Other operating expense by 140 bps to 14.7%, power & fuel cost by 150 bps to 22.2% and employee benefit cost by 90 bps to 5.9% as percentage of net adjusted sales. Thus, the operating profit dropped 38% to Rs 640.71 crore.
At segment level, PBIT of cement segment fell 60% to Rs 319.33 crore while it was down 48% to Rs 23.08 crore for windmill segment. Margins of cement segment declined 1230 bps to 8.6% while windmill segment margin slid 1300 bps to 27.5%.
Other income declined by 13% to Rs 8.05 crore, thus, PBIDT down by 38% at Rs 648.76 crore. Further with 5% rise in interest cost to Rs 188.13 crore and 9% rise in depreciation allowance cost to Rs 306.29 crore, the PBT de-grew 74% to Rs 154.34 crore. The tax expenses declined by 91% to Rs 16.64 crore due to adjustment of MAT credit entitlement of Rs 36.67 crore. Resulting, the effective tax rate dropped 2070 bps to 10.8% during the period. Thus, the net profit was eventually lower by 66% to Rs 137.70 crore.
Promoters Holding
As of 31st March 2014, promoters holding remain unchanged at 42.32% compared to previous quarter.
The scrip is currently trading at Rs 271.95 (22 May 2014) on the BSE.