Shree Cements

The company ended its 15 months fiscal on 30th June 2012 so what we have currently is its first quarter numbers for the period ended 30th Sept 2012. YoY, the numbers are spectacular mainly on account of the base effect but QoQ, the numbers do not all that great and that could also be blamed on the base effect, as it was a stellar performance in Q4 and the fact that July – Sept is usually the weakest season for cement companies.  In current Q1, its net sales is at Rs.1323 crore, up 55% on a YoY but down 9% on a QoQ. Sequentially, both cement as well as power did not do too well, with revenue from cement down 7% and that from power down 14%. But YoY, cement revenue rose 40% and power rose by a whopping 209%. EBIT for cement for the quarter was at 20% as against 26% in previous quarter and sharply up from 14% on a YoY. EBIT for power was at 23%, up from 21% on a QoQ and in previous year corresponding quarter, it had a loss.

Sequentially, the company has reduced its total operating expenses by 3% but as a percentage of net sales, it has gone up from 72% to 77%. Clearly, higher realisations is what helped the company post these numbers; they rose 10%  and more importantly, it dispatched 6,171 lakh units v/s 1,600 lakh units previous year quarter. Its total capacity utilization stands at 90%. Its total debt as at 30th June 2012 stood at Rs.961 crore.  The CCI had imposed a fine of Rs.397.51 crore on the company and the company is contesting this fine and not provided for and it has approached the Competition Appellate Tribunal, which in turn, has asked for further details on production, pricing and sales. So there is respite on that front for some time. Shree Cement has the largest single-location integrated cement plant in North India located in Rajasthan with an installed capacity of 13 million tonne. While North accounts for 72 per cent of its volumes, the rest is from the central India. The next quarters are expected to be much better given the price increase post monsoon.