Performance for quarter ended December 2019

Ramco Cements standalone total income from operation inclined 6% to Rs 1,277.98 crore for the third quarter ended December 2019, on the back of rise in cement sales volume and realisation. The cement sales volume (including exports) inclined 3.5% to 28.44 lakh tonne and cement sales realization rose 1.9% to Rs 4475 per tonne.

During the current quarter, the company witnessed sluggish demand in its core markets coupled with pressure on prices due to active monsoon. Demand in eastern markets was more visible during the current quarter, but the prices particularly in west bengal were very poor.

OPM decreased by 180 bps to 15.9%. As per percentage to sales and net of stock adjustments, freight & handling cost decreased 90 bps to 20.2% and power & fuel cost dropped 210 bps to 20.3%, while other cost rose 200 bps to 15.6%, raw material cost grew 190 bps to 18.2%, and employee benefit expenses rose 80 bps to 7.6% during the quarter. Thus, the operating profit dropped by 5% to Rs 202.87 crore.

The operating cost continue to remain under control in view of favourable prices of fuels viz., pet coke, diesel during the current quarter. The company has been constantly focussing on various cost reduction initiatives and improving productivity while maintaining highest quality standards. The company's marketing initiatives of right products for right applications have attained desired momentum. The company is also taking continuous efforts to optimise the supply chain efficiency.

The Other income inclined by 29% to Rs 8.45 crore. The interest cost gained 59% to Rs 21.50 crore. Depreciation cost rose 5% to Rs 79.68 crore. As a result, the Profit before Tax (PBT) declined 16% to Rs 110.14 crore. The net tax expenses for the quarter were down 50% to Rs 15.34 crore. Effective tax rate declined 920 bps to 13.9%. Thus, the Net profit dropped by 6% at Rs 94.80 crore.

Nine Months ended December 2019 performance

For Nine Months ended December 2019, sales revenue for the period inclined by 10% to Rs 3,978.54 crore. The cement sales volume (including exports) inclined 5.6% to 82.71 lakh tonne and cement sales realization rose 4.6% to Rs 4720 per tonne. Exports have increased by 21% during the current year under review.

With expansion of OPM by 190 bps to 21.6%, the operating profit went up by 21% to Rs 857.40 crore. Other income was up 49% to Rs 25.83 crore, thus, PBIDT increased by 21% at Rs 883.23 crore.

During the current year under review, the company has contributed to Chief Ministers' Relief Fund / Political Parties, amounting to Rs.19 crore as against Rs.4.20 crore in the corresponding previous period. During the nine months period ended 31-12-2019, the company has incurred Rs.1.29 crores towards employee separation scheme in Mathod plant.

Further with jump in interest cost by 31% to Rs 49.75 crore, along with rise in depreciation allowance cost by 5% to Rs 232.01 crore, the PBT grew by 28% to Rs 601.47 crore. Taxation outgo increased by 14% to Rs 146.55 crore. the company has made current tax provision of Rs.104.90 crore under MAT as against Rs.111.82 crores under regular method in the corresponding period of previous year.

The deferred tax for the nine months period ended 31-12-2019 is Rs.98.59 crore as against Rs.10.29 crore in the corresponding period of previous year. MAT credit recognised during the nine months period ended 31-12-2019 is Rs.61.29 crore. Deferred tax adjustments during the current year pertaining to earlier years is Rs.4.35 crores as against Rs.6.29 crore during the corresponding period of previous year. Thus, Net profit advanced 34% to Rs 454.92 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 the nine months period ended 31-12-2019, the company has generated 20.69 crore units as against 22.07 crore units of the previous corresponding period. The income for the nine months period ended 31-12-2019 from the wind power business is Rs.53.63 crores as against Rs.58.94 crores from corresponding period of previous year. The operating expenses for the nine months period ended 31-12-2019 is Rs.15.58 crores as against Rs.14.95 crores during the corresponding period of previous year.

SUBSIDIARY COMPANIES

RAMCO WINDFARMS: For the nine months period ended 31-12-2019, the generation of power is 3.20 crore units as against 3.34 crore units for the corresponding period of previous year. For the nine months period ended 31-12-2019, the revenue from operations and EBIDTA were Rs.12.81 crore and Rs.9.21 crore respectively. During the corresponding previous period, the revenue from operations and EBIDTA were Rs.13.38 crore and Rs.9.48 crore respectively. The subsidiary company has an installed capacity of 39.835 MW.

RAMCO INDUSTRIAL & TECHNOLOGY SERVICES LIMITED: This Company became subsidiary w.e.f. 21-3-2019. For the nine months period ended 31-12-2019, the revenue from operations and EBIDTA is Rs.29.90 crore and Rs.0.46 crore, respectively.

The Competition Commission of India (CCI) vide its order dated 31-08-2016 had imposed a penalty of Rs.258.63 Crores 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.25.86 Crores being 10% of the penalty. The Company backed by legal opinion, believes that it has a good case and hence no provision is made.

CAPACITY EXPANSION

The Status of company's capacity expansion programme is as detailed below: 

• Expansion of grinding unit in Kolaghat, West Bengal from 1 MTPA to 2 MTPA was commissioned in September, 2019. 

• New grinding unit in Haridaspur, Odisha with a capacity of 0.9 MTPA is expected to be commissioned in March, 2020. 

• Expansion of grinding unit near Vizag, AP from 0.95 MTPA to 2 MTPA is expected to be commissioned in March, 2020. 

• Expansion of clinkering capacity at the Jayanthipuram, AP from 3 MTPA to 4.50 MTPA along with WHRS capacity of 27 MW, is expected to be commissioned before December, 2020. 

• New cement plant in Kolimigundla, Kurnool District, AP with clinkering capacity of 2.25 MTPA and cement capacity of 1 MTPA is expected to be commissioned before March, 2021. The proposed plant shall have the facility viz., railway siding, WHRS of 10 MW and thermal power plant of 15 MW. 

• As against the proposed capex of Rs.3,530 crore for the above capacity expansion programme, the company has so far incurred Rs.1,837 crore for the period up to 31-12-2019. The company propose to meet the above capex partly through internal accruals and partly through borrowings.

BORROWINGS

The company's total borrowings as on 31-12-2019 is Rs.2,679 crore (including current maturities of Rs.341 crore), out of that Rs.1,382 crore is from banks, Rs.195 crore of debentures and Rs.305 crore of Soft/Interest free loans are long -term in nature. The average cost of interest bearing borrowing is at 7.54% p.a.

The scrip is currently trading at Rs 811.75 on 29 January 2020 on the BSE.