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Cautiously optimistic about India Cements’ performance in 2015: Srinivasan

India Cements Vice-Chairman N Srinivasan today said that he is cautiously optimistic about his company’s performance in 2015, after ending on a difficult and tough year.

Addressing company’s shareholders today, he said last year operating profit was lower due to lesser volume and realisation went down by Rs 200 a tonne. The company also had one-time cost, due to loss in sale of ship, fuel surcharge and others.

India Cements reported a loss of Rs 162.40 crore as against Rs 163.55 crore profit a year ago. Revenue dropped to Rs 4,529.84 crore from Rs 4,615.67 crore a year ago.

Srinivasan said there have been two items of non-recurring exceptional items of expenditure including Right of Recompense paid to banks amounting to Rs 57.13 crore and fuel surcharge adjustment towards electricity charges amounting to Rs 69.43 crore, totalling Rs 126.56 crore.

“By and large we lost price, and volume and capacity utilisation was lower which impacted the bottomline,” he said.

The industry also faced cost pressure due to “unprecedented” increase in exchange rate, revision in railway freight, power tariff revision, monthly dosage of increase in the price of petroleum products and increase in wages due to new settlement.

During the year, the company exited from the Corporate Debt Restructuring (CDR) mechanism after paying the compensation amount payable as per the guidelines.

According to him all India capacity utilisation, for the cement industry, is around 71-72%, compared to 60% in South. Cement industry’s all India capacity is currently at around 360 million tonnes, including 145 million tonnes in South.

On the outlook, he said, their is a slight improvement so far, expectations is high with the new government and hope is that the New Year will improve the demand.

The company is also hoping that fresh investments will flow into Andhra Pradesh and Telegana, which will push the demand for Cement in the South. India Cements got major chunk of its capacity in these states.

“We are geared up to meet the demand and got enough capacity. We are cautiously optimistic about next year,” said Srinivasan.

He added the power generation capacity of the comapny is 160-170 MW, which was achieved in recent years, will help the company as the capacity utilisation goes up.

“We could save Rs 58 crore in power, since we had captive power and we did not buy power at high cost,” said Srinivasan. On CCI’s fine of Rs 187 crore, he said, “We will fight legally, we have not done anything wrong and it will be proved”.

It may be noted in 2012, Competition Commission of India (CCI) has imposed a penalty of more than Rs 6,300 crore for allegedly colluding to keep prices high for 14 companies, including India Cements.

Chennai Super Kings Cricket Ltd

While the shareholders of Chennai Super Kings (CSK), an IPL team owned by India Cements, did not speak much, company source said end of the fiscal CSK will be demerged and will be floated as a new subsidiary before March 2015.

The new company will be named as Chennai Super Kings Cricket Ltd.

India Cements had bagged the CSK franchise for about $ 91 million, payable through 10 years to the Board of Control for Cricket in India (BCCI) in equal instalments from 2008, when it had won the bid for the franchise.

For 2013-14, CSK clocked revenue of Rs 166 crore. Its revenue comes by way of a share from BCCI-IPL, from the sale of media rights and sponsorship income. Besides, it also garners revenue through stadium gate collections, team sponsors, uniform sponsors, etc. CSK’s sponsors include Aircel, Gulf Oil and UST Global.

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