The Ramco Cements posted 32% drop in standalone net profit of Rs 114.47 crore for the second quarter ended September 2018 inspite of 11% gain in total income from operations to Rs 1183.54 crore backed by rise in cement sales volume partially offset by drop in realisation. The cement sales volume (including exports) inclined 14.7% to 24.69 lakh tonne but cement sales realization dropped 3.4% to Rs 4622 per tonne. The benefit of higher topline was offset by spike in operating cost. OPM reduced by 740 bps to 20.9%, thus, the operating profit dropped by 18% to Rs 247.15 crore.
Cement
The sale volume of cement has increased by 18% during the six months' period ended 30th September 2018, compared to the corresponding period of the previous year. During the current quarter, Sales in Kerala was affected due to unprecedented heavy rain during the monsoon season.
Cost
Average diesel price had increased by 22% during the current half year ended 30-9-2018, which had resulted in the increase in transportation cost of both raw materials and finished goods. During the half year ended 30-9-2018, the cost of pet coke and coal continue to remain at higher levels compared to the previous corresponding period. The rupee depreciation has also impacted the fuel cost further.
Wind Power
The Windmills have generated 2085 Lac units for the six months ended 30th September 2018 as against 2145 Lac units of the corresponding period of previous year. The Income from the division for the six months ended 30-9-2018 was Rs.58.02 Crores as against Rs.59.94 Crores of the corresponding period of the previous year.
Performance for quarter ended September 2018
Ramco Cements standalone total income from operation inclined 11% to Rs 1183.54 crore for the second quarter ended September 2018, helped by rise in cement sales volume partially offset by drop in realisation. The cement sales volume (including exports) inclined 14.7% to 24.69 lakh tonne but cement sales realization dropped 3.4% to Rs 4622 per tonne.
The benefit of higher topline was offset by spike in operating cost. The Operating Margin (OPM) reduced by 740 bps to 20.9%. As per percentage to sales and net of stock adjustments, power & fuel cost increased 410 bps to 20.1%, freight & handling cost 350 bps to 23%, while employee benefit expenses shed 20 bps to 7.1% and raw material cost 60 bps to 15.2%, during the period. Thus, the operating profit dropped by 18% to Rs 247.15 crore.
The Other income sank 18% to Rs 5.91 crore. The interest cost fell 24% to Rs 13.12 crore. Depreciation cost rose 1% to Rs 72.81 crore. As a result the Profit before Tax (PBT) declined 24% to Rs 167.13 crore. The net tax expenses for the quarter rose 3% to Rs 52.66 crore. Effective tax rate inclined 820 bps to 31.5%. Thus, the Net profit was down by 32% at Rs 114.47 crore.
Six Months ended September 2018 performance
For Six Months ended September 2018, sales revenue for the period inclined by 15% to Rs 2403.42 crore. With contraction of OPM by 760 bps to 20.7%, the operating profit went down by 16% to Rs 497.43 crore. Other income was down 13% to Rs 10.83 crore, thus, PBIDT decreased by 16% at Rs 508.26 crore. Further with drop in interest cost by 25% to Rs 24.56 crore, but rise in depreciation allowance cost by 2% to Rs 146.27 crore, the PBT fell by 21% to Rs 337.43 crore. With fall in taxation provision by 5% to Rs 97.98 crore, the Net profit shed 26% to Rs 239.45 crore.
Subsidiary Company- Ramco Windfarms
For the six months ended 30th September 2018, the Company has generated 313 lakh units, with a monetary value of Rs.12.55 Crores, as against 349 lakh units generated during the corresponding period of the previous year, with a monetary value of Rs.13.98 Crores.
Expansion Plan
The Company's ongoing expansion programmes are as below:
- Expansion of Kolaghat Grinding Unit from 0.9 MTPA to 2 MTPA
- Expansion of Vizag Grinding Unit from 0.9 MTPA to 2 MTPA
- New Grinding Unit in Odisha with a capacity of 0.9 MTPA
- Expansion of clinkering capacity in Jayanthipuram by 1.50 MTPA with 27 MW of Waste Heat Recovery System (WHRS)
The aggregate estimated capex for the above is Rs. 1,930 Crores which is proposed to be funded mostly through internal accruals. In case of need, the Company may go in for borrowings.
LEGAL
The Competition Commission of India (CCI) vide its order dated 31-08-2016 had imposed a penalty of Rs. 25863 Lacs on the company towards alleged cartelisation. Our appeal along with the appeals of other cement companies had been dismissed by NCLAT vide its order dated 25-7-2018. Against the order, the company appealed to the Hon'ble Supreme Court, which by its order dated 5-10-2018 admitted the appeal and directed to continue the interim order passed by NCLAT. Accordingly, the company re-deposited Rs.2586 Lacs being 10% of the penalty. The Company backed by legal opinion, believes that it has a good case and hence no provision is made.
The scrip is currently trading at Rs 603 (30th October 2018) on the BSE.