In spite of a jump in the profit in the fourth quarter of 2010-11, thanks solely to better prices (because sales-volumes were still sluggish), India Cements reported an 80 per cent drop in net profit for 2010-11.
The company made a net profit of Rs 55.28 crore in the fourth quarter of last year compared with Rs 38.34 crore for the corresponding quarter of the previous year.
The company's board of directors has recommended a dividend of Rs 1.5 a share (15 per cent) for the year.
India Cements' net profit for 2010-11 was Rs 68 crore compared with Rs 354 crore for the previous year. In fact, profit would have been even less but for a Rs 31-crore profit on sale of an investment in the first quarter.
The market for cement in the South — the company's forte — was sluggish, the company's Vice-Chairman and Managing Director, Mr N. Srinivasan, told a press conference here today. Against a demand for 60 million tonnes of cement, the supply capacity was 100 million tonnes. “It was a miracle that the prices held,” he said, but explained the “miracle”, noting that cement manufacturers were wise enough to pull back despatches to let prices firm up.
Also, significant increases took place in the cost of imported coal, revision in tariff by electricity boards in Tamil Nadu and Andhra Pradesh, revision in the prices of fly ash by thermal power plants, the hike in the administered price of natural gas and increases in wages, all adding to higher cost of producing cement, Mr Srinivasan said. He said that the cement industry would continue to be like this over the next couple of years.
CSK brand
Mr Srinivasan today reiterated that ‘Chennai Super Kings', the Indian Premier League cricket franchise that won the championship on Saturday, would be more valuable than India Cements (the company that owns the franchise) as a brand.
He said that ‘CSK' had become popular as a brand, especially in the North, and India Cements hopes to cash-in on the brand.
There is, however, no move to name a cement product after the brand but brand CSK would figure prominently alongside cement brands —like ‘Coromandel Cements, from the House of CSK'.
Asked if CSK would be ‘corporatised' or taken public, Mr Srinivasan said he had no such plans. “I will just let it be for a long time,” he said.