Ramco Cements faces demand slowdown in Q3, profit slips

Ramco Cements Q3 results

Ramco Cements, one of India’s biggest cement manufacturers, reported poor demand for cement during the three months ended December.

The Chennai-based company, which gets most of its revenues from South India and Eastern India, reported a revenue growth of just 6% for the third quarter, compared to a growth of 12.6% for the first half of the financial year.

The company’s cement volumes increased by 3.5% during the quarter, compared to an increase of 6.8% seen in the first half of the financial year.

“During the current quarter, the company witnessed sluggish demand in its core markets coupled with pressure on prices due to active monsoon,” said the company. Tamil Nadu, one of Ramco’s core markets, saw extended rains from the North East monsoons.

“Demand in eastern markets was more visible during the current quarter, but the prices particularly in West Bengal were very poor.”

However, said Ramco Cements, the market trend in January has been “positive with improvement in prices”.

Due to the decline in sales growth rate and pricing, the company’s margins remained under pressure during the quarter.

Operating profit, which takes into account expenses related to production, fell to 211.3 cr from 220.5 cr in the same quarter of 2018.

Net profit fell to Rs 94.8 cr from Rs 101.1 cr, compared to the rising trend seen in the first half of the year.

Ramco said it benefited from lower prices of fuels such as pet coke and diesel during the quarter.

“The company has been constantly focussing on various cost reduction initiatives and improving productivity while maintaining highest quality standards. The company’s marketing initiatives of right products for right applications have attiained desired momentum. The company is also taking continuous efforts to optimise the supply chain efficiency,” it claimed.

The company’s total borrowings as on 31-12-2019 was Rs 2,679 crores, out of which Rs 1,382 crores is from banks, Rs 195 crores of debentures and Rs 305 crores comprise soft or interest free loans of a long term nature.

The average cost of interest bearing borrowing is at 7.54% per year, it added.