ACC, the country's largest cement manufacturer and a part of the Holcim group, has delivered exceptionally strong results for the second quarter of the current financial year. Though cement results were expected to be strong, the ACC results are way above expectations and other large cement companies are also expected to follow suit.

For the quarter ended 30 June, 2006, ACC has reported a consolidated net profit of Rs 411.79 crore – an increase of 176.46 per cent over Rs 148.95 crore reported for the same quarter of previous year. Consolidated sales revenues increased 21.49 per cent to Rs 1,477.47 crore from Rs 1,216.17 crore for the previous year quarter.

The company realised Rs 130.19 crore from sale of land and Rs 7.93 crore from sale of investments, which have been classified as exceptional items, during the quarter. Adjusted for exceptional items, consolidated net profits have increased 89.32 per cent to Rs 265.4 crore from Rs 140.19 crore.

Consolidated sales volumes of ACC during the second quarter were 4.3 per cent higher at 4.63 million tonnes as compared to 4.44 million for the same quarter of previous year.

Operating profits for the quarter increased 73.85 per cent while operating margins as a percentage of net sales improved considerably to 32.63 per cent as compared to 22.8 per cent for the prior year quarter. The sharp jump in operating margins is a result of higher results and lower input costs.

Input costs, including power & fuel, surprisingly declined 7.63 per cent during the quarter. Transportation costs were higher by 20.08 per cent while staff costs were higher by 27 per cent.

Interest costs declined 33.65 per cent while depreciation charges went up by 8.76 per cent. Tax provision was substantially higher at Rs 141.37 crore as compared to Rs 56.26 crore.

ACC is expanding the capacity at its Bargarh cement unit to 2.14 million tonnes per annum from 0.96 million tonnes. The company is also setting up 2 captive power plants with an aggregate capacity of 55 MW.

In a statement ACC said, "The cement industry recorded a growth rate of about 9.44 per cent during the calendar year 2005 as compared to 8.27 per cent for the previous period. During the half year January-June 2006, the industry grew around 12.2 per cent as compared to 10.5 per cent for the corresponding period of previous year. With the continued emphasis by the Government on infrastructure sectors and housing sector, the demand for cement is expected to remain strong."