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Articles: Stock Market | India Cements
- Prof. 00782 Maverick
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Largest cement producer in southern India; Good turnaround with all losses wiped out !
India Cements is the largest cement producer in southern India with a market share of 28% in the South. It aims to achieve a 35% market share in the near future. The company has an installed capacity of 8.8 million tonnes (including Visaka Cement where India Cements holds a controlling 49.9% stake). The company has 7 manufacturing locations spread across the state of Andhra Pradesh and Tamil Nadu.
The Company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimisation of existing plants as well as by acquisitions. The company is no more saddled with huge debt burden thanks to turnaround in the business, implementation of debt restructuring scheme and investment by private equity in the company. The company expects the debts to be less than equity by March 2007 while company's accumulated losses have been reduced to Rs 30 crore at the end of September and will be wiped off by October itself.
The company had a bonanza from the start of this year when sales tax rate in Tamil Nadu by the state government was reduced to a flat rate of 14% from January 2006 onwards. Earlier, the state had a dual sales structure on cement with rates varying from 16.8% to 25.2%. Thus earlier prices were forcibly down in TN which are now normalised.
Fantastic Quarterly performance; Margins doubled on price growth and lower power costs !
In the September Quarter 2006, the company sold 1.88 mn tonnes of cement compared to 1.85 mn tonnes in the same quarter last year. India Cements has posted 20 fold jump in net profit to Rs 117.32cr for this quarter compared with Rs 5.85cr for the same period last year on the back of increased consumption in southern states. The firming of cement prices as well as surge in demand particularly from Andhra Pradesh and Karnataka had resulted in the good performance.
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