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Our Corporate Bureau
Mumbai, Oct 28: The Associated Cement Companies (ACC) has stunned the market by staging a dramatic recovery in the second quarter with a net profit of Rs 12.62 crore, up from Rs 3.73 crore in the corresponding period last year. The ACC stock spurted by Rs 33 on the Bombay Stock Exchange in response, climbing at close to Rs 880.
The company, aided by higher realisation and better cost management, posted profit before interest, depreciation and tax of Rs 81.80 crore, against Rs 61.62 crore in the second quarter of 1997-98.
For industry leader ACC, the realisation picked up sharply in the just concluded quarter, as net sales at Rs 575.22 crore were lower than last year's Q1 sales of Rs 576.68 crore. The improved performance was also aided by higher other income which increased sharply to Rs 17.50 crore from Rs 13.82 crore in the corresponding quarter last year.
The profit before tax in the second quarter gained sizable to Rs 14.10 crore from Rs 4.23 crore in the corresponding period last year. Half-yearlyprofits were, however, marginally lower at Rs 21.10 crore, as against Rs 21.21 crore in the first half last year.
ACC managing director TMM Nambiar said in a statement that the company's operating profit in the second quarter showed an improvement over the corresponding quarter last year due to better net sales realisation in cement. "The operating expenses during the quarter were maintained at a lower level despite all-round inflation in coal, power and manpower costs," Nambiar said.
Total expenditure incurred in the second quarter was brought down to Rs 522.28 crore from Rs 541.71 crore in the corresponding quarter last year. Interest costs, however, zoomed to Rs 41.36 crore, up from Rs 28.54 crore in the same period last year. Even the provision for depreciation was higher at Rs 26.34 crore as against Rs 20.67 crore last year.
During the second quarter the company notched up a profit of Rs 4.83 crore on sale US-64 units of the Unit Trust of India, while another bounty of Rs 3.50 crore came in theform of incentives receivable for prior years in respect of its one million tonne plant at Kymore.
Our Research Bureau adds: On a quarter-to-quarter basis, cement sales in terms of quantity have declined but despite only a marginal improvement in cement realisation, concentration on higher value-added products like ready-mix concrete and lower operational costs, operating margins have improved sharply by three percentage points. Compared with the operating margin in the first quarter (10.45 per cent), the OPM in the second quarter is lower but the impact of monsoon is reflected in the second quarter. Interest outgo has increased substantially due to the ongoing stream of projects. On quarter-to-quarter and half-to-half year basis, ACC has posted excellent results.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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