India: ACC Q2 net profit falls 27%

India: ACC Q2 net profit falls 27%
Published: 25 July 2008

ACC Ltd, India’s largest cement producer, on Thursday announced that the company has reported a fall of 26.92% in its net profit to Rs 255.08 crore for the second quarter ended June 30, 2008 as against Rs 349.02 crore in the corresponding quarter last year.

The company’s turnover for the period stood at Rs 1,920.11 crore, up 1.52% as compared to Rs 1,891.28 crore in Q2 FY07. "Sales volume at 5.29Mt of cement during the second quarter, dipped 1.30% as compared to 5.36Mt in 2007 on account of lower availability of cement from two plants and constraints in dispatches during the agitation in Rajasthan," the company said. ACC Ltd shares on Thursday were down 5.13% to close at Rs 560.75 on the Bombay Stock Exchange.

The fall in profit during the period was due to increase in government taxes and duties by 15% while cement prices net of government taxes and duties were up only 4%. Fuel costs alone rose by a staggering 41%.
"The quarter saw an unprecedented increase of 24% year-on-year in the cost of principal inputs including coal, power, fly ash and gypsum," the company informed. Meanwhile, the board of directors of the company have recommended a payment of interim dividend to its shareholders for the financial year 2008 at the rate of 100%.

Going forward, ACC Ltd’s major projects being implemented include expansion of capacity at Bargarh, New Wadi and Chanda, which will add 7.2Mt of capacity, raising the company’s installed capacity to 30.4Mt by 2010. The staggering rise in input costs and pressures to cap selling prices at the same time is a major area of concern for the industry. Unless the industry is able to recover cost increases, through suitable adjustments in selling prices through rational economic considerations, the cement industry will be under pressure, the company said.