Performance for quarter ended September 2019

Ramco Cements standalone total income from operation inclined 11% to Rs 1,316.66 crore for the second quarter ended September 2019, on the back of rise in cement sales volume and flat realisation. The cement sales volume (including exports) inclined 10.3% to 27.24 lakh tonne and cement sales realization rose 1.8% to Rs 4708 per tonne.

OPM increased by 150 bps to 22.4%. As per percentage to sales and net of stock adjustments, freight & handling cost decreased 340 bps to 20.5%, while power & fuel cost rose 70 bps to 20.6%, raw material cost 100 bps to 16.1%, and employee benefit expenses 40 bps to 7.5% during the quarter. Thus, the operating profit grew by 19% to Rs 295.21 crore.

The Other income inclined by 56% to Rs 9.22 crore. The interest cost gained 12% to Rs 14.73 crore. Depreciation cost rose 5% to Rs 76.54 crore. As a result the Profit before Tax (PBT) inclined 28% to Rs 213.16 crore. The net tax expenses for the quarter were down 14% to Rs 45.04 crore. Effective tax rate declined to 21.1% from 31.5% corresponding previous quarter. Thus, the Net profit grew by 47% at Rs 168.12 crore.

Six Months ended September 2019 performance

For Six Months ended September 2019, sales revenue for the period inclined by 12% to Rs 2700.56 crore. The sale of cement for the company was at 5.43 million tonne, compared to 5.08 million tonne of the previous corresponding period. Exports have grown by 39% during the period under review.

During the current half year, the company has launched a premium product variant viz., "SUPERCRETE" in the Tamilnadu, Kerala, Karnataka and Andhra Pradesh markets and the response has been encouraging. The company continued focus on customer service, brand building and developing niche markets by conducting various meets with masons, architects, contractors and engineers by technical services team viz., MACE. The company's initiative of right product for right applications has been well received and appreciated by all sections of the consumers.

With expansion of OPM by 350 bps to 24.2%, the operating profit went up by 32% to Rs 654.53 crore. The company has been constantly focussing on various cost reduction initiatives and improving productivity while maintaining highest quality standards. The company is taking continuous efforts to optimise the supply chain efficiency.

Other income was up 60% to Rs 17.38 crore, thus, PBIDT increased by 32% at Rs 671.91 crore. During the half year ended 30-9-2019, the company has contributed to Chief Ministers' Relief Fund / Political Parties, amounting to Rs.19 crore as against Rs.3 crore for the Half year ended 30-9-2018. During the half year ended 30-9-2019, the company has incurred Rs.1.28 crore towards employee separation scheme in Mathod plant.

Further with jump in interest cost by 15% to Rs 28.25 crore, along with rise in depreciation allowance cost by 4% to Rs 152.33 crore, the PBT grew by 46% to Rs 491.33 crore. Taxation outgo increased by 34% to Rs 131.21 crore. The company has made current tax provision of Rs.85.72 crore under MAT as against Rs.76.66 crore under regular method in the corresponding period of previous year. The deferred tax for half year ended 30-9-2019 is Rs.57.54 crore as against Rs.15.03 crore in the corresponding period of previous year. MAT credit recognised during the half year ended 30-9-2019 is Rs.12.05 crore as against Nil during the corresponding period of previous year. Thus, Net profit advanced 50% to Rs 360.12 crore.

Annual Financial Performance

For the financial year ended March 2019 (FY 2019), sales revenue for the period inclined by 17% to Rs 5,146.27 crore. With contraction of OPM by 480 bps to 20.1% due to pressure on cement prices for most part of the year and spiralling effect of fuel prices, thus, the operating profit fell down by 6% to Rs 1,036.53 crore.

During the year, the company has incurred CSR Expenditure, Contribution to various Chief Ministers' Relief Funds and Contribution to Political Parties, amounting to Rs.42.17 crore (PY: Rs.10.93 crore), out of which Rs.28.64 crore (PY: Rs.675 crore) relates to the quarter ended 31-03-2019.

Other income was down 22% to Rs 28.44 crore, thus, PBIDT decreased by 6% at Rs 1,064.97 crore. Further with drop in interest cost by 14% to Rs 50.87 crore, but rise in depreciation allowance cost by 2% to Rs 298.52 crore, the PBT fell by 9% to Rs 715.58 crore. With fall in taxation provision by 8% to Rs 209.69 crore, the Net profit shed 9% to Rs 505.89 crore.

During quarter ended September 2019, the company has generated 19.20 crore units as against 20.85 crore units of the previous corresponding period. The income for the half year ended 30-9-2019 from the wind power business is Rs.51.83 crore as against Rs.58.02 crore from corresponding period of previous year. The operating expenses for the half year ended 30-9-2019 is Rs.10.30 crore as against Rs.9.67 crore during the corresponding period of previous year.

SUBSIDIARY COMPANIES

RAMCO WINDFARMS: For the half year ended 30-9-2019, the generation of power is 2.87 crore units as against 3.13 crore units for the corresponding period of previous year. For the half year ended 30-9-2019, the revenue from operations and EBIDTA were Rs.11.50 crore and Rs.9.14 crore respectively. For the half year ended 30-9-2018, the revenue from operations and EBIDTA were Rs.12.55 crore and Rs.9.93 crore respectively. The subsidiary company has an installed capacity of 39.835 MW.

RAMCO INDUSTRIAL & TECHNOLOGY SERVICES LIMITED: The company became subsidiary w.e.f. 21-3-2019. For the half year ended 30-9-2019, the revenue from operations and EBIDTA is Rs.17.26 crore and (-) Rs.1.30 crore respectively.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

• The Company's initiatives on various CSR activities have been well recognised. The Ariyalur Plant has been conferred with

• The Overall CSR Excellence Award organised by ZEE Business on the National CSR Leadership Congress at Bengaluru on 18th September 2019.

• The Corporate Social Responsibility Summit & Awards, 2019 under Best CSR Impact Award Category by UBS Forums on 9th August 2019 at New Delhi.

• The Asia's Best CSR Practices Award by CM0 Asia on 16th August 2019 at Singapore, for the Company's commitment and respect for communities, environment and the people.

International Research Institute for Manufacturing, Mumbai has awarded the Gold medal and Silver medal to Ramasamyraja Nagar plant, Alathiyur plant respectively for Manufacturing Competitiveness. Ramasamyraja Nagar plant has also been conferred with Special Apex Award - First Runner Up in All India Level, for demonstrating commitment and excellence in our journey towards improving manufacturing competitiveness.

Confederation of Indian Industry at the National Award for Excellence in Energy Management at Hyderabad held from 17th September to 19th September 2019 has awarded Ramasamyraja Nagar and Alathiyur plants for National Energy Leaders and Excellent Energy Efficient Units.

The Apex India Foundation, at the Apex India Sustainability Conference held at Goa on 24th September 2019 has awarded Alathiyur plant the Platinum Award for Energy Efficiency and Gold Award for Environment Excellence. Also the Ariyalur plant has been conferred with Platinum Award for Eco Innovation and two Gold Awards for Water Stewardship and Occupational Health & Safety.

CAPACITY EXPANSION

The unit-2 of Cement grinding in Kolaghat, West Bengal has commenced commercial production from 26-9-2019. With this, the installed grinding capacity in Kolaghat has increased from 1 MTPA to 2 MTPA. The remaining on-going capacity expansion programme is progressing as per schedule but for the delays due to extended monsoon. The company has so far incurred Rs.1,430 crores for the capacity expansion programme. The company proposes to meet the above capex partly through internal accruals and partly through borrowings.

BORROWINGS

The company's total borrowings as on 30-9-2019 is Rs.2,441 crore (including current maturities of Rs.287 crore), out of that Rs.1,145 crore from banks and Rs.345 crore of Soft/Interest free loans are long term in nature. The average cost of interest bearing borrowing is at 7.55% p.a.

The scrip is currently trading at Rs 775.55 on 30 October 2019 on the BSE.