Analyst Meet / AGM 22-Nov-16
Conference Call
Heidelberg Cement India
Currency demonetization likely impact on cement demand
The company has conducted a conference call on 18 November 2016 to discuss the financial performance for the second quarter ended September 2016 and way forward. Mr. Jamshed Naval Cooper –CEO & Managing Director and Mr. Anil Sharma –Chief Financial Officer of the Company addressed the conference call.
Key highlights
The company has reported 3% decline in top-line to Rs384 CRORE in 2QFY17 mainly owing to lower sales volume. The sales volume declined by 5.7% to 9.98 lakh tonne. Operating cost was lower by about 2.4%. Total EBITDA has increased by 44% over the previous year and EBITDA percentage in margin was higher by 6.2%. The company net profit zoomed to Rs 165 crore in Q2FY17 from Rs 21 crore in Q2FY16.
On the cost development side- The operating cost, excluding logistic cost, declined 3.9% to Rs 2717 per tonne, primarily due to lower costs of Petcoke and Bags- already hardened significantly, Optimization of fuel mix, and Savings from generation of power from Waste Heat Recovery based Power Generation Plant (WHRP) at Narsingarh. Logistic cost declined by 5.8% to Rs 535 per tonne.
The EBITDA per tonne moved up from 476 the previous year to 727. Improvement in pricing apart from savings in power costs due to commissioning of WHRP, lower fuel costs and lower cost for bags were the prime drivers for the increase in EBITDA.
Cement sales volumes stood at 998 KT (thousand tonnes) in Q2FY17, lower by 5.7%. Heavy rains and sand shortage impacted construction activities leading to lower demand while prices remained firm across markets. Gross realisation increased by 2.7% to Rs 3852 per tonne in Q2FY17. Capacity Utilization for Q2FY2017 ~77%. Trade: Non Trade Mix ~ 80:20 for Central India.
The Company Gross Long Term Debt further reduced to Rs 830.2 crore (as at 30th Sept. 2016) from Rs 875.6 (as at 31st March 2016). The Company has paid first ECB tranche of Rs 454 crore, i.e. Rs 45 crore in the month of September. Net Debt reduced to Rs 810 crore (as at 30th Sept 2016) from Rs 937.8 crore (as at 31st March 2016).
The Company cement demand continues to remain weak amidst festival season. The Company expects currency demonetization likely hit cement demand because most of the construction building material in the rural segment is bought on cash except organized sector where the big builders and big players always buy on cash and carry basis on cheques through the bank.
The currency demonetization will hit the real estate scene, especially in metro areas because of the inventory may pile up again which was started liquidating that could affect Tier-I cities where the demands to come down. But, the Company expects good monsoon after 2 years of drought like conditions should help revive volume offtake in the coming days in the rural side the demand.
The Company will get some interest-free benefit from UP government, some interest-free loan and VAT benefit of Rs 50 per tonne in Madhya Pradesh to the volume what Company sell there. The Company sales ~40% of total sales volume in MP and this VAT benefit would last for 10 years.
The Company guides general CAPEX of Rs 45-50 crore for FY17.
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