Madras Cements benefits from higher realisations

Madras Cements benefits from higher realisations
Published: 08 November 2011

Strong realisations boosted profit at Madras Cements Ltd in the three months ended September. In spite of the 9% YoY dip in cement despatches, revenue rose 27% to INR825.7 crore. The reason was that cement prices held out in southern India, despite volumes falling due to sluggish government activity and the festive season towards the end of the quarter.

The key positive was that net average realisations (blended) jumped by about 49% from the year-ago period, although they fell marginally against the June quarter.

This helped offset the increase in costs – mainly power, fuel and freight – which have been impacting the industry for a while now. Raw material costs as a percentage of sales fell almost 700 basis points from a year ago.

A key concern for analysts is the fact that it’s the production discipline maintained by cement maker that has helped pull off higher realisations to cover costs.