The basic reason is cost control. Volume growth on a quarter to quarter basis was 6.2 percent, while growth was 2.7 per cent compared to the second quarter. According to the management, the variable cost for cement production in Gujarat is just Rs 450 per tonne. This is almost the price at which slag (including freight) is available. This must be the lowest variable cost for any cement plant in the country. Similarly, OPM of 37 per cent from the cementbusiness must rank among the highest in the world.

Cost reduction was mainly on account of keeping cost of power on a tight leash. The consumption of power per unit of cement produced in the third quarter is 98 units compared to the average of 103 units for 1997-98. The variable cost of power (excluding interest) works out be just Rs 1.50.

The landed cost of coal is Rs 1700/tonne and coal consumption is 12 per cent of clinker production. The last quarter for the company is expected to be even better despite prices in April in both Mumbai and Gujarat market being very low. The market has not reacted positively to the results. The scrip closed at the same price -- Rs 259.30 -- as on the previous trading day. This anomaly may get corrected in the short term.