Performance for quarter ended December 2020

Ramco Cements standalone total income from operation inclined 5% to Rs 1,339.07 crore for the third quarter ended December 2020, on the back of rise in cement price partially offset by decline in volume. The cement sales volume (including exports) declined 8.1% to 26.14 lakh tonne.

The sale volume in the current quarter impacted due to extended and above normal monsoon in Tamilnadu, Kerala, Karnataka, AP and Telangana. The company has registered good growth in its eastern markets. The cement prices were constantly under pressure across all its markets during the current quarter.

OPM improved to 29.6% from 15.9% corresponding previous quarter. As per percentage to sales and net of stock adjustments, freight & handling cost decreased 60 bps to 19.7% and power & fuel cost dropped 620 bps to 16%, other cost declined 440 bps to 11.2%, raw material cost sank 380 bps to 14.5%, and employee benefit expenses shed 10 bps to 7.5% during the quarter. Thus, the operating profit (OP) grew by whooping 96% to Rs 369.99 crore.

The company power and fuel cost for the current quarter has reduced mainly due to higher inventory base, procured at lower cost in earlier quarters. This has benefited the company to keep a check on overall cost, while the market prices of pet coke and coal have witnessed sharp increase during this quarter. Besides, the operations of 9 MW WHRS in Jayanthipuram have also helped to manage the power cost under control during the quarter.

The procurement cost of HDPE bags cost have witnessed sharp increase in the current quarter due to supply chain bottlenecks and sharp hike in polymer prices.

During the current quarter, the company has expensed Rs.3.27 crores towards Employees stock option expenses on pro-rata basis for the options granted to its employees under ESOS, 2018.

The lower sales volume during the current quarter has resulted in under-absorption of overheads; however, the company has taken various sustainable austerity measures to reduce overhead.

The Other income declined by 25% to Rs 6.35 crore. The interest cost dropped 26% to Rs 15.99 crore. Depreciation cost rose 12% to Rs 89.62 crore. As a result, the Profit before Tax (PBT) inclined 170% to Rs 297.73 crore.

For the quarter ended December 2020, the company has made current tax provision of Rs.52 crore under MAT as against Rs.19.18 crore under MAT in the corresponding period of previous year. The company has written back excess tax provision amounting to Rs.1.61 crore during the current quarter.

MAT credit was reversed during the quarter amounting to Rs.17.85 crore due to change in estimates as against MAT credit recognition of Rs.49.24 crore in the previous corresponding period. The deferred tax for the December quarter 2020 was Rs.28.14 crore as against Rs.41.05 crore in the previous corresponding period. The deferred tax adjustments relating to earlier years for the quarter was Nil as against Rs.4.35 crore in the previous corresponding period.

As per Section 115BAA in the Income Tax Act, 1961, the company has an irrevocable option of shifting to a lower tax rate and simultaneously forgo certain tax incentives, deductions and accumulated MAT credit. The Company has not exercised this option for the financial year 2020-21 in view of the benefits available under the existing tax regime.

Thus, the net tax expenses for the quarter increased 528% to Rs 96.38 crore. Thus, the Net profit zoomed by whooping 112% at Rs 201.35 crore.

Nine Months ended December 2020 performance

For Nine Months ended December 2020, sales revenue for the period declined by 9% to Rs 3,637.87 crore. The cement sales volume (including exports) declined 18.2% to 67.64 lakh tonne.

With expansion of OPM by 870 bps to 30.2%, the operating profit went up by 28% to Rs 1098.95 crore. Other income was down 4% to Rs 24.76 crore, thus, PBIDT increased by 27% at Rs 1,123.71 crore.

Further with jump in interest cost by 46% to Rs 72.44 crore, along with rise in depreciation allowance cost by 12% to Rs 259.50 crore, the PBT grew by 32% to Rs 791.77 crore. Taxation outgo increased by 67% to Rs 245.05 crore. Thus, Net profit advanced 20% to Rs 546.72 crore.

Annual Financial Performance

For the financial year ended March 2020 (FY 2020), sales revenue for the period inclined by 4% to Rs 5,368.44 crore. With growth in OPM by 100 bps to 21.2%, the operating profit jumped by 10% to Rs 1,136.62 crore.

Other income was up 31% to Rs 37.20 crore, thus, PBIDT rose by 10% at Rs 1,173.82 crore. Further with rise in interest cost by 40% to Rs 71.35 crore and rise in depreciation allowance cost by 6% to Rs 315.26 crore, the PBT, as a result, jumped 10% to Rs 787.21 crore. With fall in taxation provision by 11% to Rs 186.12 crore, the Net profit grew 19% to Rs 601.09 crore.

During the quarter ended 31-12-2020, our windfarms have generated 3.50 crore units as against 1.49 crore units in the previous corresponding period. The income for the quarter ended 31-12-2020 from the wind power business is Rs.8.50 crore as against Rs.1.80 crore in the previous corresponding period. The operating expenses for the quarter ended 31-12-2020 is Rs.5.64 crore as against Rs.5.28

crore during the previous corresponding period. During the quarter, the company has received Rs.65.30 crore from TNEB as against the outstanding of Rs.147.88 crore as at 30-9-2020.

SUBSIDIARY COMPANIES

• RAMCO WINDFARMS: For the quarter ended December 2020, the generation of power is 0.59 crore units as against 0.33 crore units in the previous corresponding period. The revenue from operations and EBIDTA is Rs.2.41 crore and Rs.0.99 crore as against Rs.1.31 crore and Rs.0.07 crore respectively in the previous corresponding period.

• RAMCO INDUSTRIAL & TECHNOLOGY SERVICES LIMITED: The revenue from operations and EDIDTA Rs 9.59 crore and Rs 0.20 crore for the quarter ended December 2020 as against Rs.12.64 crore and Rs 1.76 crore respectively in previous corresponding period.

CAPACITY EXPANSION

The company expects to commission the clinkering unit of 1.5 MTPA along with 9 MW WHRS in Jayanthipuram and 2.25 MTPA clinkering unit in Kurnool during Q1 of FY2022 albeit difficulties/challenges experienced during the pandemic caused by COVID-19. The 1 MTPA cement grinding facility, 12 MW of WHRS and 18MW of TPP in Kurnool are expected to be commissioned during FY 2021-22.

During the nine months period ended December 2020, the company has incurred Rs.1,166 crore towards capex, including for the above-mentioned ongoing capacity expansion programme. The balance capex to be incurred as on 31-12-2020 was Rs.537 crore for its ongoing capacity expansion.

BORROWINGS

The company's gross debt as on 31-12-2020 is Rs.3,106 crore, out of which Rs.234 crore are soft/interest-free debt. During the current quarter, the average cost of interest bearing borrowings reduced to 6.14% from 7.24% compared to previous corresponding period.

The scrip is currently trading at Rs 860.70 on 03 February 2021 on the BSE.