The year saw ICL's net dropping by 30 per cent to Rs 58.26 crore as against Rs 82.58 crore in the previous year. In fact, it seems to have incurred a loss in the second half. But for the other income - of Rs 13 crore from sale of ships - the bottomline would have been even worse. Nevertheless, the ICL board has maintained dividend at Rs 3 per share (30 per cent).

A sharp fall in yield at a time when the company had set up a new unit and invested heavily in acquisitions ensured that the interest and depreciation costs were not recovered. While ICL had improved its cement sales in volume terms by 18.8 per cent, the overall increase in income (including income from shipping)was only 11.39 per cent in rupee terms. The Rs 26 per bag drop in prices in February, which Srinivasan said was a "deliberate drop in prices" in order to get a stranglehold on the market, ate into the margins.

ICL has reported a turnover of Rs 927.10 crore (Rs 832.34 crore) for 1997-98. Other income was Rs 21 crore (Rs 16 crore) and essentially comprised Rs 11 crore surplus from the insurance claim (over and above the book value) of Rs 32.50 crore for one of the company's ships which sank off Malacca Straits in September last year. The company also managed a profit of Rs 2 crore from a ship it disposed of to fund the Raasi takeover.

Operating margins at 21.22 per cent showed a marginal improvement over last year's 20.91 per cent. Srinivasan attributed this to better efficiency in operation, especially in fuel and energy costs where savings to the extent of Rs 26 crore were effected. The Chilamkur plant was also functioning very efficiently and at its peak capacity, he added. Interest cost was higher at Rs83.77 crore (Rs 47.40 crore), essentially due to the fact that the Dalavoi plant went on stream during the first quarter of 1997-98.

During the year, the company acquired CCL's Yarraguntla plant for Rs 198 crore, fully funded by debt. It also borrowed to invest in Visaka Cement Industries (expected to be commissioned in September) and for acquiring Raasi.

The total borrowings of ICL stood at Rs 1,000 crore with an average borrowing cost of Rs 15.6 per cent and the debt equity ratio was 2:1.

Srinivasan explained that as most borrowings were during the later part of the year and since some of them were capitalised, interest charge was comparatively lower. But, interest was also lower due to another factor. The company has chosen to capitalise interest cost till the Dalavoi plant stabilised some time in June last year, though the plant commenced production in April. The established norm is to capitalise interest only till the date of commencement of commercial production. To that extent interest cost wascharged lower.

Depreciation was higher due to capitalisation of the Dalavoi plant and could have been much higher but for the two ships that went out of service. The company has provided minimum alternate tax of Rs 4.5 crore in compliance with the guidelines issued by the Institute of Chartered Accountants of India.

Srinivasan said the shipping division continued to do badly and had incurred operational loss during the year. He, however, said there were no immediate plans of disposing of the ships as they had captive use in importing coal but added that there would be no addition to the fleet.

The company has also jumped the share buyback bandwagon. The board of directors approved buyback to the extent of 10 per cent of the equity as per statute. Although Srinivasan said the move was only an `enabling provision', it is also timely in the sense that a positive impact on the prices now (languishing at Rs 50 levels) would do a lot of good as ICL proposes to time its rights issue in August or September.