Operating expenses of the Company was Rs 787.75 crore for the period, higher by 3% from Rs 764.01 crore a corresponding previous quarter, as input and logistics costs increased during the period. As a result, operating profit margin (OPM) squeezed 470 bps YoY to 17.9%.

Ramco Cements total income from operation dropped 3% YoY to Rs 959.15 crore for the quarter ended June 2014. The combined domestic cement sales dropped 3.9% to 2.13 million tonne but realization edged up 0.2% to Rs 4345 per tonne.

The cement segment revenue, contributing 97% of total revenue, sank 2% to Rs 935.99 crore. The windmills segment revenue, contributing 3% of total revenue, dropped 29% to Rs 26.58 crore.

The Operating Margin (OPM) contracted by 470 bps to 17.9% on the back of escalation in input and logistics costs. The freight & handling cost gained 150 bps to 20.7%, raw material cost gained 300 bps to 19.6%, other costs gained 60 bps to 13.2% and employee benefit cost gained 60 bps to 6.1% as percentage to sales and net of stock adjustments. However, power & fuel cost dropped 90 bps to 20.7% during the period. As a result, the operating profit de-grew by 23% at Rs 171.40 crore.

At segment level, PBIT of cement segment fell 25% to Rs 104.34 crore. The PBIT of windmills segment lost 39% to Rs 14.12 crore. Margins of cement segment declined 340 bps to 11.1% while it was down 900 bps to 53.1% for windmills segment.

With jump in other income by 1% to Rs 1.83 crore, the PBIDT dipped by 23% to Rs 173.23 crore.

The Company interest cost jumped 11% to Rs 50.01 crore but depreciation dropped 17% to Rs 62.68 crore during the quarter on implementation of depreciation methodology as per the Companies Act, 2013. As a result the Profit Before Tax (PBT) declined 42% to Rs 60.54 crore.

The Tax Expense for the quarter ended 30 June 2014 includes adjustment of MAT (minimum alternative tax) credit entitlement of Rs 12.69 crore arising from reversal of tax provision related to current assessment years. As a result, tax outgo for the period was down 32% to Rs 24.28 crore. The effective tax rate grew 610 bps to 40.1% during the quarter. Thus, the net profit de-grew by 47% to Rs 36.26 crore.

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 30^th June 2014, promoters holding remain unchanged at 42.32% compared to previous quarter.

The scrip is currently trading at Rs 280.60 (28 July 2014) on the BSE.