India Cements saw its profit more than double in 3QFY11-12 to INR56.31m crore (US$11.5m) helped by an accounting change and a revival in demand in the key Andhra Pradesh market. The Chennai-based company registered a net profit of INR21.47 crore net profit in the Octocber-December quarter of the financial year, the company said in a statement to the Bombay Stock Exchange.
However, vice-chairman and managing director Narayanaswami Srinivasan remains cautious about his forecast for south India's largest cement maker. "We have to wait to see if this isn't just a flash in the pan. That said, cement makers are entering the peak January-September sales season and the sentiment seems to be looking up."
India Cements has three factories in Tamil Nadu and four in Andhra Pradesh.
Sales from operations were 20% higher at INR941.5 crore despite expectations of a seasonal downswing due to north-east monsoon season in some parts of south India that slows construction activity.
The reported third-quarter revenue, however, was higher by Rs12.79 crore as an equivalent amount was carried forward in the balance sheet under the foreign exchange monetary translation difference account and not included in the profit and loss account, the company said in a statement.
"In the southern states there has been no jump in infrastructure and government spending, so most of the growth has come from growth in private housing and rural demand," TS Raghupathy, executive president of India Cements, said at a conference call on Monday evening.
Business in Andhra Pradesh had taken a hit in the past two years due to political violence in the state.
But after a 13.7 per cent drop in October sales, Andhra Pradesh registered a 10.8 per cent growth in December. And the Tamil Nadu market witnessed a 24.5 per cent rise in sales year over year, compared with a 27 per cent drop in October. As a result, capacity utilisation in the previous quarter stood at 66 per cent, higher than the 59 per cent seen a year earlier.
Source: Hindustan Times