Shree Cements has declared its second quarter results and the company's Q2 net profit was up at INR 289 crore versus INR 107.5 crore. Its net sales were up at INR 909 crore versus INR 629.2 crore while its OPM stood at 48.8%.
Mr HM Bangur, MD of Shree Cements, spoke to CNBC-TV18 on the company's second quarter results. Here is a verbatim transcript of the exclusive interview with HM Bangur on CNBC-TV18.
Q - Could you can take us through your numbers, how have the revenues and margins panned out?
A - The margins have increased. There has been a 44% rise in the revenues INR 906 crore.
Q - How were the margins this quarter and how do you expect to see them in the next half year?
A - This quarter EBITDA margin is 48.8% and in the coming quarters we expect this to definitely fall down. The cement prices are coming down and we don't expect that same margins now.
Q - What kind of price falls are you expecting in percentage terms? Could it be as small as say a 5% fall or could it be even worse?
A - We don't know. In the commodity market, the price is the total unknown factor we can talk about cost with some certainty. However, the prices are determined by the market. But we expect still the margins to be partially protected by electricity production which is going to come into this quarter some of our electrical units should start working.
Q - Could you just give us the exact topline and bottomline number?
A - Our topline number this quarter is INR 910 crore and the bottomline PAT is INR 289 crore.
Q - So it is come much higher than our estimates there at about INR 224 crore. Now I wanted to get some clarity on the power side of your business, how much has that contributed and going forward what are you expecting?
A - Power has given us a profit of about INR 78 crore and this power profit in the coming quarters will get better. However, profits always are at a number of selling price, so we don't know how the market for power will change. Thus, our production of the power in the coming quarters should increase by around 15% in the marketable production.
Q: How many megawatts will that be?
A: Right now we are selling about 35 MW and in the coming quarter we should be able to sell 50 MW.
Q: What sort of CAPEX plans do you have going forward? I believe your current capacity is still about 9 metric tonnes, what do you expect it to be by the end of FY10 and FY11?
A: By FY10 our production capacity will be 10.5 million tonne and by FY11-end it should be 12 million tonne.
Q: What about the clinker volumes?
A: Clinker volumes will be 8 million tonne within next one year.
Q: How do you sense pricing will pan out? You have come across monsoons which has been a seasonally weak period but it has not impacted you all that much. How would you expect pricing to pan out going forward?
A: The pricing in the coming months should be softer. However, the degree of weakness always depends on other fraction and the market dynamic also. The demand growth is very good, it is better than what we were expecting. But still the supply side pressure is there or is bound to be there in the coming months.
Q: For any of your CAPEX plans are you planning to tap the markets? Any plans either through a QIP or through a preferential allotment, any plans to tap via equity?
A: No, we are definitely not going to increase our equity. Our capex plans are well covered by our internal generation and a little bit of loan and our loan will also be only so much that our debt equity ratio will be less than 0.25.
Sourced from CNBC TV 18
http://www.moneycontrol.com/news/results-boardroom/see-cement-prices-coming-down-shree-cements_421348.html
