The Ramco Cements posted 18% drop in standalone net profit of Rs 101.07 crore for the third quarter ended December 2018 inspite of 15% gain in total income from operations to Rs 1210.43 crore on the back of rise in cement sales volume and realisation. The cement sales volume (including exports) inclined 11.3% to 27.47 lakh tonne and cement sales realization rose 3.5% to Rs 4,392 per tonne. The benefit of higher topline was offset by spike in operating cost. OPM reduced by 460 bps to 17.7%, thus, the operating profit dropped by 9% to Rs 213.98 crore.
CEMENT
The sale volume of cement has increased by 19% during the nine months' period ended 31st December 2018, compared to the corresponding period of the previous year. Sale volumes have grown both in southern and eastern markets, but the realisation has not improved due to pressure on prices and increase in transportation cost due to diesel price increase.
Wind Power
The Windmills have generated 2207 Lakh units for the nine months ended 31st December 2018 as against 2425 Lakh units of the corresponding period of previous year. The Income from wind power for the nine months ended 31-12-2018 was Rs.58.94 Crores as against Rs.65.78 Crores of the corresponding period of the previous year.
COST
Average diesel price had increased by 22% during the nine months ended 31-12-2018, which had resulted in the increase in transportation cost of both raw materials and finished goods. During the nine months ended 31-12-2018, the power and fuel cost continue to remain at higher levels compared to the previous corresponding period due to higher cost of pet coke and coal. However, during the current quarter, the prices of pet coke and coal have softened and the effect of the same will reflect in operating cost in coming quarters.
Performance for quarter ended December 2018
Ramco Cements standalone total income from operation inclined 15% to Rs 1,210.43 crore for the third quarter ended December 2018, helped by rise in cement sales volume and realisation. The cement sales volume (including exports) inclined 11.3% to 27.47 lakh tonne and cement sales realization rose 3.5% to Rs 4,392 per tonne.
The benefit of higher topline was offset by spike in operating cost. The Operating Margin (OPM) reduced by 460 bps to 17.7%. As per percentage to sales and net of stock adjustments, power & fuel cost increased 620 bps to 22.4%, freight & handling cost 150 bps to 23%, while employee benefit expenses shed 50 bps to 6.7% and raw material cost 70 bps to 16.3%, during the period. Thus, the operating profit dropped by 9% to Rs 213.98 crore.
The Other income inclined by 27% to Rs 6.56 crore. The interest cost fell 16% to Rs 13.48 crore. Depreciation cost rose 4% to Rs 75.57 crore. As a result the Profit before Tax (PBT) declined 13% to Rs 131.49 crore. The net tax expenses for the quarter rose 6% to Rs 30.42 crore. Effective tax rate inclined 420 bps to 23.1%. Thus, the Net profit was down by 18% at Rs 101.07 crore.
Nine Months ended December 2018 performance
For Nine Months ended December 2018, sales revenue for the period inclined by 15% to Rs 3,613.85 crore. With contraction of OPM by 660 bps to 19.7%, the operating profit fell down by 14% to Rs 711.41 crore. Other income was down 1% to Rs 17.39 crore, thus, PBIDT decreased by 14% at Rs 728.80 crore. Further with drop in interest cost by 22% to Rs 38.04 crore, but rise in depreciation allowance cost by 2% to Rs 221.84 crore, the PBT fell by 19% to Rs 468.92 crore. With fall in taxation provision by 3% to Rs 128.40 crore, the Net profit shed 24% to Rs 340.52 crore.
SUBSIDIARY COMPANY - RAMCO WINDFARMS LIMITED
For the nine months ended 31st December 2018, the Company has generated 334 lakh units, with a monetary value of Rs.13.38 Crores, as against 399 lakh units generated during the corresponding period of the previous year, with a monetary value of Rs.15.98 Crores.
LEGAL
The Competition Commission of India (CCI) vide its order dated 31-08-2016 had imposed a penalty of Rs. 25863 Lakh 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 Lakh being 10% of the penalty. The Company backed by legal opinion, believes that it has a good case and hence no provision is made.
CAPEX
During the nine months' period ended 31-12-2018, the Company has incurred Rs.767 Crores towards capital expenditure for the ongoing capacity expansion at various locations.
The scrip is currently trading at Rs 553.55 on 29th January 2019 on the BSE.