• 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 1411.58 crore (or 54% of sales). But the segment revenue of construction was lower by 36% (to Rs 931.57 crore or 36% of sales) and that of real estate was lower by 71% (to Rs 73.81 crore or 3% of sales). And similarly the revenue of hospitality was down by 4% (to Rs 72.77 crore or 3% of sales). The segment revenue of power was up by 167% to Rs 10.13 crore and that of others was up by 140% (to Rs 96.72 crore or 4% of sales).

• Downside at EBIT was largely on account of lower segment profit of real estate, construction and cement. On lower segment revenue, the segment profit of construction was down by 51% (to Rs 213.70 crore) on the back of 670 bps contraction in segment margin to 22.9%. Segment profit of cement was down by strong 83% (to Rs 4.63 crore) despite modest 3% growth in revenue was largely on account of 168 bps contraction in margin to 0.3%. Segment profit of real estate was down by 94% to Rs 5.95 crore hurt by lower sales and lower margin. The segment profit of hospitality was down by 17% to Rs 14.36 crore. On the other hand the segment profit of investment was Rs 5.31 crore compared to a loss of Rs 2.69 crore in the corresponding previous period. The segment loss of power was Rs 6.02 crore compared to a loss of Rs 1.49 crore in the corresponding previous period.

• Sharp contraction in operating margin was largely on account of change in revenue mix with increased contribution to topline from low margin business as well as lower margin across all major business of the company. The material cost (as % to sales net of stocks) was higher by 390 bps to 31.3% and staff cost was up by 150 bps to 7.5%. Similarly the OE was up by 550 bps to 18.6%. Though construction expenses was lower by 430 bps to 26.2% that is not good enough to offset the rise in other cost heads leading to sharp contraction in OPM. 

Nine month performance

Sales were lower by 14% to Rs 8304.96 crore but with 50 bps contraction in OPM, the operating profit was lower by 16% to Rs 1951.55 crore. After accounting for lower other income, higher interest and depreciation cost the PBT before EO was a loss of Rs 1000.73 crore compared to a loss of Rs 83.42 crore in the corresponding previous period. EO income was higher by 22% to Rs 482.28 crore Thus the PBT after EO was a loss of Rs 518.45 crore compared to a profit of Rs 312.73 crore. Taxation was a write back of Rs 215.27 crore compared to a write back of Rs 0.74 crore in the corresponding previous period. Thus the PAT was a loss of Rs 303.18 crore compared to a profit of Rs 313.47 crore in the corresponding previous period.  

Other developments

The company during the quarter ended Dec 2014 sold 74% stake (98901000 equity shares owned by the company) of Bokaro Jaypee Cement, a JV between Jaiprakash Associates and SAIL to Shri Rangam Securities & Holdings, an associate of Dalmia Cements Bharat for overall consideration of Rs 667.56 crore.

The BoD of the company during the quarter approved implementation agreement and scheme of Arrangement with UltraTech Cement (UTCL) for transfer of two of its cement plants with an aggregate grinding capacity of 4.9 million TPA and 180 MW captive thermal power plant at Bela and Sidhi in Madhya Pradesh to UTCL. In exchange UTCL will issue non convertible debentures and non convertible preference shares worth Rs 4538 crore to the company besides taking over debt and working capital aggregating Rs 787 crore.

The stock hovers around Rs 23.90.