Highlights-

• The total income of the company during the 3^rd quarter ended December 2009 increased 28% to Rs 526 crores as compared to the corresponding quarter of the previous year.
• The sugar volume decreased 3% whereas the cement volume increased 42% during the quarter, and the realization for sugar increased 76% while for cement the realization fell 16% during the quarter under review.
• The sugar sales during the quarter increased 64% to Rs 174 crore whereas the cement sales increased 17% to Rs 316 crore and the other business segment sales was flat at Rs 29 crore.
• The OPM margin fell 581 bps to 19% during the quarter under review, whereas the net profit margin fell 148 bps to just 4% on a year-on-year basis.
• The net profit stood at Rs 23 crores, which was 5% lower compared to the corresponding quarter of the previous year.
• The net sales during the first nine-month of the current fiscal grew by 29% to Rs 1629 crore whereas the net profit increased 18% to Rs 135 crore.
• Ramp-up of cement capacity and those coming on stream helped in improving the top-line for the cement business, while favorable sugar cycle with buoyant pricing helped the sugar business.
• The profitability of the cement business was negatively impacted due to under utilization and rise in input and logistics cost.
• The all India cement prices fell 3% during the 3^rd quarter on y-o-y basis. The eastern market witnessed a firm 8% increase in price during period; however the price fall in south was steeper at 19%. Flat Andhra Pradesh demand and high capacity addition in this region impacted the prices significantly.
• Going ahead the company anticipates pan India cement capacity addition of around 23 million metric tonnes by the end of the current fiscal, of which 11 million metric tonnes would come-up in the southern market.
• There was price pick-up in December 2009 after drastic fall in the previous 2 months in the southern region. Besides delayed capacity enhancement by many players and improving demand will allow the price to increase in the short term, although in the medium term the price will continue to remain volatile.
• The coal price during the quarter was lower by 35% despite recent price rise whereas the gypsum prices were lower by 9% as compared to the same period last year.
• The CIF coal price during the quarter under review was US$ 84 per metric tonnes as compared to US$ 121 per metric tonnes during the corresponding quarter of the previous year. The current coal price is around US$ 100 per metric tonnes.
• The company is looking to develop its own coal mines in the next 3-4 years, which have been allotted in Dalmia as well as OCL India.
• The fly ash prices increased 7% year-on-year as new capacities that came on stream increased the demand.
• The all India cement demand during the 9 month period ended December 2009 rose by a healthy 11% whereas the demand in South remained flat at just 4% during the period under review. However strong demand was witnessed in the eastern market, viz- Orissa and West Bengal.
• The all India cement will continue to grow at double digits with the demand in south expected to improve as Andhra Pradesh and Karnataka clocking demand growth of 6% and 16% respectively during December 2009.
• The company's cement production increased to 9.43 lakh metric tonnes of cement during the quarter as compared to 7.11 lakh metric tonnes of cement during the same period last year thus clocking a growth of 33% whereas it sold 9.74 lakh metric tonnes of cement during the quarter ended December 2009 as compared to 6.87 lakh metric tonnes during the same period of last year.
• The company's clinker production during the quarter ended December 2009 was the highest at 9 lakh metric tonnes.
• The cement production and sales during the first nine-month ended December 2009 increased 20% to 29.97 lakh metric tonnes and 29.86 lakh metric tonnes respectively.
• 48% of the company produce during the first half was sold in Tamil Nadu, whereas Kerala, Karnataka and Andhra Pradesh contributed 26%, 11% and 10% of the company geographic mix.
• The net realization per tonnes of cement corrected 16% to Rs 3,250 per metric tonnes during the 3^rd quarter ended December 2009 as compared to Rs 3,891 per metric tonnes during the corresponding quarter of the previous year.
• The average net realization during the nine-month period ended December 2009 was Rs 3701 per metric tonnes as compared to Rs 3791 per metric tonnes during the corresponding period of the previous year,
• The cement clinker ratio during the first nine-month ended December 2009 was 1.29. 68% was PPC production.
• The demand for cement primarily will be driven by the government thrust on infrastructure growth, besides urban development and up-lifting of rural areas and recovery in the housing sector. Significant housing shortfall and low per capita consumption will boost demand going ahead.
• The all India sugar production during the current sugar year is estimated to grow by 7% to 15 million metric tonnes. However the domestic demand is around 22 million metric tonnes, thus imports is expected to substitute for the gap in domestic demand and supply.
• The domestic price of sugar continued to rise as inventories are at all time low.
• The sugar sales during the quarter ended December 2009 was 49,723 tonnes as compared to 51,490 metric tonnes during the corresponding quarter of the previous year.
• For the first nine-month ended December 2009 the integrated sugar sales increased to 146735 tonnes as compared to 118719 tonnes during the corresponding period of the previous year.
• During the quarter under review the sugar realization improved 76% to Rs 30328 per metric tonnes.
• Crushing was lower during the quarter due to lower availability raw material, thus higher recovery and raw sugar imports will makeup for lower crushing.
• The company crushed 5.52 lakh tonnes of sugar during the quarter ended December 2009 as compared to 5.91 lakh metric tonnes during the corresponding quarter of the previous year. The recovery improved to 8.8%.
• As the global inventory of sugar is expected to drop to historical lows in next 12 months, international and domestic prices is expected to inch upward.
• The co-gen power generation fell 12% to 5.42 lakh kwh while power export fell 16% to 3.39 lakh kwh during the quarter ended December 2009.
• The co-gen realization improved 25% post rate revisions during the quarter ended December 2009. Also the company is planning conversion of existing bagasse based boilers into multi fuel ones in order to enable usage during off-season
• The 2.5 million metric tonnes (100% PPC) green-field clinkerization unit in Ariyalur, Tamil Nadu is in stabilization stage currently. The 27 MW thermal power plant; in Ariyalur is expected to start production shortly.
• The current capacity utilization of the 2.5 million metric tonnes in Kadapa in Andhra Pradesh is around 40% and this is expected to increase as the demand from the Andhra Pradesh market picks up.
• The company has so far spent Rs 200 crore of capital expenditure during the first nine-month of the current fiscal on the green-field project in Ariyalur.
• The company has a further capital expenditure of Rs 4500 crore of which Rs 3100 crore would be debt which are already being tied-up for the 10 million metric tonnes green-field cement plant.
• All the sanction for the project is already received; however the company is yet to start the construction and is waiting the board's decision to do the same.
• The debt as on December 2009 in the company's book is around Rs 2573 crore, of which Rs 2016 is long term, whereas the rest is sales tax and working capital loan.
• The net debt equity ratio is 1.5.
• The cash and cash equivalent as on December 2009 is Rs 479 crore. Of this Rs 112 crore is invested in marketable securities while Rs 283 crore being invested in mutual funds and the rest being cash.
• The company increased its stake in OCL India from 21.7% to 45.4% through block deal done on 28^th January 2010 at a total consideration of Rs 175 crore. Thus the current cash and cash equivalent is Rs 304 crore.
• Increased stake in OCL will provide the company greater access to the Eastern region, where the demand is growing at 18% since the beginning of the current fiscal.
• Demand in Bihar has risen by 34% while in West Bengal and Orissa it has grown by 19% and 14% respectively since the beginning of the current fiscal.
• OCL has 9% market share in the Eastern region
• The current cement capacity of the company has increased to 9 million metric tonnes per annum, while the clinker capacity is 6 million metric tonnes.