Ambuja Cement Reports 31% Decline In Net Profit

Ambuja cement, one of the top five players in cement industry, which has existence all over India except South, has announced its second quarter result on 24 July 2013. 

The company follows the calender year as their fiscal year. Its revenues have declined by 8.6% to Rs 2345.73 Crore in Q2CY2013 as against Rs 2565.63 crore posted during Q2CY2012.  The net profit of the company has declined by 31% on yearly basis and stood at 324.20 crore against 468.90 crore .

Sales volume of the company has declined by 2.9% on yoy basis at 5.38 million tonnes (MT). Moreover, realisations per ton have declined by 5.85% to Rs 4360.09 in Q2CY2013 from Rs 4631.10 per ton in Q2CY2012 . Overall EBITDA Margin of the company has declined to 20.98% as against 28.26% on yoy basis. EBITDA per ton has also dropped by 30% and stood at Rs 914.54 in Q2FY13.

Board have approved for setting up 2.17 million tonnes per annum GreenField  clinkerization project in at Marwar Mundwa,Dist Nagaur,Rajisthan with three Clinker grinding unit in Rajisthan,Uttar Pradesh and Madhya Pradesh investing Rs 3500 crore.

In one of the recent development, Holcim the major investor in Ambuja and ACC has announced to reorganise its holdings in Ambuja Cement and ACC where Holcim will own 61.39% in Ambuja cement which in turn will hold 50.01% in ACC. So Holcim would indirectly hold the ownership in ACC . The joint Business operation of Ambuja cement and ACC would reduce the expenses in both the companies. The merger would help both the companies to create synergy in their operations. According to the company the direct synergy in this transaction would work out to be Rs 900 crore per annum in form of fixed cost optimization and supply chain over next two years. The deal is subject to shareholders and regulatory approval. Both the companies will invest in capacity expansion to the tune of 10 Million tonnes per annum.

Moreover, Ambuja cement would have their existence in South India through ACC. This could be a great move for both the companies in future but presently as the Rupee is losing its strength and the cost of fuel and imported coal in going higher, the impact is directly on manufacturing and freight movement of the cement companies. To make situation worst monsoon has strike earlier in the major part of the country which in turn will reduce the cement consumption.