• Down-side in sales for the quarter is largely due to lower revenue registered by construction and real estate. Segment revenue of cement was higher by modest 3% to Rs 1403.75 crore (or 51% of sales). But the segment revenue of construction was lower by 25% (to Rs 1084.43 crore or 40% of sales) and that of real estate was lower by 69% (to Rs 90.49 crore or 3% of sales). The segment revenue of power was up by 136% to Rs 37.67 crore (or 1% of sales). And similarly the revenue of hospitality was up by 20% (to Rs 52.41 crore or 2% of sales) and that of others was up by 24% (to Rs 61.18 crore or 2% of sales).

• Downside at EBIT was largely on account of lower segment profit of real estate and investments. Segment revenue of Construction though registered strong fall, its segment profit was up by 7% (to Rs 454.81 crore) on the back of 1270 bps expansion in segment margin. Segment profit of cement was up by strong 60% (to Rs 102.05 crore) despite modest 3% growth in revenue was largely on account of 260 bps expansion in margin to 7.3%. Segment profit of real estate was down by 86% to Rs 19.03 crore hurt by lower sales and lower margin. On the other hand the segment profit of investment was down by 73% to Rs 28.26 crore. Similarly the segment profit of power was down by 53% to Rs 5.03 crore. The hospitality business continue to be in red with a segment loss of Rs 4.39 crore compared to a loss of Rs 8.31 crore in corresponding previous period.
  
• On year on year basis, the operating margin expanded by 260 bps to 27.5% and that can be attributed to construction project mix. The material cost (as % to sales net of stocks) was higher by 140 bps to 28.1% and staff cost was up by 40 bps to 6.7%. The OE was up by 90 bps to 15.4% but with construction expenses down by 300 bps has more than offset the rise in other cost heads and facilitated expansion in OPM.

During the current year, the Company has implemented Schedule II of the Companies Act, 2013, and has accordingly computed the depreciation as prescribed under Schedule II to the Act. The carrying value of assets which have completed their depreciation period as on 1st April, 2014 have been adjusted against the General Reserve. The remaining assets have been depreciated over their remaining useful life. Had there not been any change in useful life of the assets, the depreciation would have been higher by Rs 25.42 crore and Rs 23.70 for the quarter and six months ended 30th September, 2014 respectively.

Half yearly performance

Sales were lower by 12% to Rs 5721.61 crore but with 250 bps expansion in OPM, the operating profit was lower by just 3% to Rs 1530.48 crore. After accounting for lower other income, higher interest and depreciation cost the PBT before EO was a loss of Rs 400.78 crore compared to a profit of Rs 101.98 crore. EO income was Rs 0.67 crore compared to Rs 396.29 crore in the corresponding previous period. Thus the PBT after EO was a loss of Rs 400.11 crore compared to a profit of Rs 498.27 crore. Taxation was a write back of Rs 213.02 crore compared to a provision of Rs 96.09 crore in the corresponding previous period. Thus the PAT was a loss of Rs 187.09 crore compared to a profit of Rs 402.18 crore.

Other developments

During the quarter, the Company has issued 21,33,73,416 Equity Shares of Rs. 2/- each at an issue price of Rs. 70.27 per share to Qualified Institutional Buyers. The Company has received Rs 1499.37 crore through the above said Qualified Institutional Placement.

The Hon'ble Supreme Court, vide its judgement dated September 24, 2014, held that the allocation of various coal blocks is arbitrary and illegal, and hence cancelled. These include one coal block allocated to the Company, namely, Mandla (North) and three coal blocks, namely, Amelia (North), Mandla (South) and Dongri Tal-ll allocated to Madhya Pradesh State Mining Corporation Limited ('MPSMCL'). Three Joint Venture Companies were formed for development and mining of three coal blocks allocated to MPSMCL in which the company and MPSMCL holds 49% and 51% respectively. The Hon'ble Supreme Court has allowed operations of the mines of Amelia (North) and Mandla North, which are already in operation, till 31st March 2015. The management based on its contractual rights under its JV agreements, its interpretation of the Ordinance and on the basis of the legal advice, believes that the financial loss or operational impact, if any, on this account needs a detailed assessment.

In terms of the Scheme of Arrangement between Jaypee Cement Corporation Limited, wholly owned subsidiary of the Company and UltraTech Cement Limited for sale of Gujarat Cement Plant comprising an integrated 2.4 MTPA Cement Plant at Kutch and 2.4 MTPA Cement Grinding Unit at Wanakbori, 27261 additional equity shares of Rs. 10/- each, fully paid up, of Ultratech Cement Limited have been allotted to the Company as final consideration during the quarter.

The Company has received requisite "No objection" from the Stock Exchanges (both NSE and BSE) for amalgamation of Jaypee Sports International Limited (JPSI) (the wholly owned subsidiary of the Company), with the Company. Necessary steps are being taken to move the application before Hon'ble High Court of Judicature of Allahabad.

Equity Shares numbering 189316882 held by the four Trusts, of which the Company is the sole beneficiary, have been pledged to secure loans obtained by the company.

The stock hovers around Rs 34.55.