MUMBAI, April 19 ACC Ltd, India's No. 2
cement maker, reported a 57 percent fall in quarterly profit
after a one-time charge, with higher costs of fuel and
transportation also squeezing margins even as sales volumes
Demand for cement in India, the world's largest producer
after China, is expected to rise 7-8 percent over this year as
lower interest rates help construction activity, analysts said,
but companies face daunting challenges to raise prices.
The Competition Commission of India, an anti-trust body, is
set to rule this month on whether cement companies have colluded
to push prices higher. No names have been mentioned but any such
findings could mean penalties for the companies.
ACC, 46 percent owned by Switzerland's Holcim, the
world's second-largest cement producer, reported net profit of
1.52 billion rupees ($29.4 million) for its first quarter ended
March, compared with 3.5 billion rupees a year earlier.
The drop was mainly due to a retrospective change in
depreciation on captive power plants which resulted in an
additional charge of 3.41 billion rupees.
Net profit would have been 3.8 billion rupees under the
earlier method, the company said.
The figure was still well below 4.3 billion rupees expected
by analysts, according to T homson Reuters I/B/E/S.
"Margins are lower on a year-on-year basis but given the
volume growth and current cement prices we expect profitability
to increase," said Rajesh Kumar Ravi, analyst with Karvy Stock
Broking in Mumbai.
Rising costs of fuel, raw materials and transport forced
manufacturers to increase cement prices by 10 percent over the
ACC said it sold 6.72 million tonnes of cement in the March
quarter, up from 6.16 million tonnes in the year-earlier period.
Net sales rose 19 percent to 30.15 billion rupees from 25.41
"Manufacturing costs and realisations were affected by steep
escalations in the cost of inputs such as coal, fly ash and
gypsum," the company said. "The cost of transportation also rose
significantly as a result of the hike in rail freight and
increase in diesel prices."
Shares in ACC, which has a market value of $4.7 billion,
closed down 3.8 percent at 1,247.60 rupees in a Mumbai market
that rose 0.6 percent.
($1 = 51.7250 Indian rupees)
(Reporting by Aditi Shah; Editing by Ranjit Gangadharan)