The latent effect of demonetisation, a halt in offtake of cement ahead of the Goods and Services Tax (GST) rollout and a severe river sand shortage in Tamil Nadu all combined to put pressure on the profits of The India Cements Ltd. (ICL) during the quarter ended June 2017.
ICL’s profit after tax decreased to ₹26.44 crore in the first quarter from ₹43.98 crore in the year-earlier period. The company reported a total income of ₹1,466 crore in the quarter (₹1,205.72 crore).
The steep increase in prices of pet coke and coal since March and the rise in staff cost due to ESOPs (employee stock option plan) provision further added to the pressure. The figures, however, are not comparable. For June 2017, the numbers also included those of the merged entities of Trinetra Cements and Trishul Concrete Products.
N. Srinivasan, vice-chairman and managing director, told the media on Friday that ICL had lost a substantial volume in Tamil Nadu, its main market, due to severe sand shortage. “Things are back to normal in Tamil Nadu in the last one week or so,” he added. The higher net plant realisation (₹3,604 a tonne in Q1 compared with ₹3,430 in the preceding quarter) helped mitigate the cost-push effect somewhat, he said.
Positive growth
Mr. Srinivasan said July had been “decent” for the company. He expected the current quarter to be much better. Stating that the “worst is behind us,” he indicated the cement industry would post positive growth this year.
His optimism stemmed from his expectation that the government would step up spending in infrastructure-related areas in the coming months.