Associated Cement Companies, the single largest cement producer in the country and part of the Holcim-Gujarat Ambuja combine, has posted excellent results for the first quarter ended 31 March 2006. The company's performance has been aided by higher cement prices during the quarter because of sustained growth in demand.
On a consolidated basis, ACC has reported a net profit of Rs 231.34 crore for the quarter, an increase of 26.94 per cent as compared to the Rs 182.24 crore reported for the same quarter of previous year. Total revenues for the quarter increased by 13.35 per cent to Rs 1,389.91 crore from Rs 1,226.19 crore.
The results are not strictly comparable with the previous year's quarter as the company had undertaken major restructuring exercises recently. It sold off the refractory business to private equity investors last year. Asbestos sheet manufacturer Everest Industries, which was a subsidiary of ACC, was also sold off.
The company merged two cement manufacturing units, Bargarh Cement and Damodhar Cement, with itself during the year.
As compared to a net profit of Rs 192.48 crore, or Rs 10.46 per equity share reported for the quarter ended December 2005, profit for the March 2006 quarter on a stand alone basis has increased by 22.34 per cent to Rs 235.48 crore, or Rs 12.69 per equity share. Stand alone revenues for the quarter at Rs 1,381.82 crore were higher by 24.87 per cent from the Rs 1,106.61 crore reported for the December 2005 quarter.
ACC shipped 49.28 lakh tonnes of cement during the first quarter, an increase of 10.77 per cent from 44.49 lakh tonnes shipped during the same period of previous year.
The impact of higher price realisations is clear from the substantial improvement in operating margins for the quarter to 23.73 per cent from 14.83 per cent for the same quarter of previous year. Operating margins were at 14.68 per cent for the December 2005 quarter.
Cost of production for the quarter has increased only 18.48 per cent from the December 2005 quarter when net sales increased by 23.83 per cent. There is a substantial increase of more than 55 per cent in employee costs when compared to the December quarter while other expenses have come down by 13.3 per cent. The company said it has started implementing the new accounting standard on employee benefits, which resulted in an additional expense of Rs 6.3 crore.
The company has sold its real estate in Delhi for a consideration of Rs 140.2 crore this month. The profits from this sale would be reflected in the results for the second quarter ending June 2006.