on Monday reported a 79.46% fall in net profit in the third quarter ended December 2018, at Rs 3.13 crore against Rs 15.24 crore in the corresponding quarter ending December 2017. The company’s total income was up 8.5% to Rs 1,320.57 crore from Rs 1,216.75 crore in the same period in 2017.
The company said in a statement that the heavy competition amongst cement manufacturers for market share, increase in prices of fuel and petroleum along with the depreciation in the rupee weighed on its performance in the quarter.
India Cements’ total expenses stood at Rs 1,317.44 crore as against Rs 1,201.51 crore in the corresponding quarter, an increase of 9.64%.
“The severe competition in the south for market share for cement due to supply overhang had its toll on the operating performance of the units in the south affecting through aberration in cement prices. Even within south, the stability of the prices varied from state to state depending upon the concentration of the units in the region. This drop in net plant realisation was compounded by the steep increase in the prices of fuel and petroleum products together with the depreciation of rupee against dollar,” the company’s statement said.
Striking an optimistic note for the quarters ahead, however, Vice Chairman and Managing Director of the company N Srinivasan said that, “pricing discipline has returned to the industry” amid increasing demand. The easing price of fuel will also have a favourable impact in the coming quarters, according to the company.
The company said that its primary market – Tamil Nadu was also affected with the cyclone “Gaja” devastating some of the districts during the month of November 2018. The capacity utilisation during the quarter under review was 76% as compared to 70% in the same quarter of the previous year, it said.
India Cements recently set up a plant in Madhya Pradesh with a capacity of 2.5 million tonnes after the acquisition of Springway Mining, an operator in the mining and quarrying sector. Explaining the company’s strategy behind its expansion in to Madhya Pradesh and North India, Srinivasan said that it would help India Cements have a pan-Indian presence, would diversify its market share and help position the company in geographies where demand is expected to grow at a swifter pace.