Binani Cement Prices are expected to remain firm till monsoon

Highlights-

• The revenue during the quarter ended March 2009 increased by 46% to Rs 498.08 crore as compared to the same period last year. However the profitability was significantly impacted due to substantial increase in the power & fuel cost despite the coal prices stabilizing considerably.
• The PBT fell by 25% to Rs 54.32 crore whereas the net profit fell by 14% to Rs 20.07 crore.
• Revenue for the full year increased by 51% to Rs 1497.32 crore during the year ended March 2009. The significant increase in power & fuel cost significantly impacted the profitability during the year. The net profit of the company thus fell by 38% to Rs 108.66 crore during the year under review.
• The infrastructure spending by the government of India as well as housing spending in the tier 2 and 3 cities coupled with the pre election spending by the state government has kept the demand buoyant during the last quarter of the previous year. Besides the common wealth games that is to happen this year is expected to maintain the cement demand growth in the northern markets.
• Thus going ahead despite additional capacity coming on stream, the company feels that there is enough demand to absorb the additional capacities at least for the next 1 year.
• The coal prices were lower when the year started, however it increased considerably during the 2^nd & 3^rd quarter of the previous year before falling and stabilizing during the 4^th quarter.
• The company produced 4.17 million metric tonnes of clinker and 4.29 million metric tonnes of cement during the year ended March 2009.
• The cement sales during the year was 4.24 million metric tonnes whereas the company also sold 0.55 million metric tonnes of clinker during the year ended March 2009.
• During the previous quarter ended March 2009, the company produced 1.30 million metric tonnes of cement, whereas the sale of cement during the quarter was 1.32 million metric tonnes and that of clinker was 0.27 million metric tonnes.
• In spite of all the recession, real estate and infrastructure slowdown the company’s performance was rather satisfactory.
• Coal prices were at its peak from July till December 2008 when it was quoting at US$ 120 – US$ 125 per metric tonnes. The current coal price is around US$ 70- US$ 80 per metric tonnes.
• Through the company’s single location of 6.5 million metric tonne in Sirohi in the state of Rajasthan with a 75-megawatt power plant, the company is servicing almost all the Northern markets besides the Rajastan market.
• Historically the cement demand grows at 1.2 times the GDP growth rate of the nation. Thus for the current fiscal the cement demand is expected to grow by 8% as compared to the expected GDP growth of 6% during the fiscal.
• The prices has risen recently and it is expected to be sustainable till monsoon, till end June or first week of July because although the Mumbai monsoon comes by the first week of June, the monsoon in the northern parts, Uttar Pradesh, Haryana comes only in the second week of July.
• The company was able to produce roughly about 4.2 million metric tonne with an installed capacity of 6.5 million. During the current year the company plans to increase the production by an additional 1 million tonnes. Thus the total production of about 6 million metric tonnes is targeted during the current fiscal.
• The company has commissioned the second line of production in its 100% subsidiary in Dubai. Dubai subsidiary is a running unit with a capacity of 1.2 million metric tonnes and is being expanded to 2 million metric tonnes. The Dubai unit is operating profitably. The expanded capacity would be completed by June 2009.
• The company’s China plant with a capacity of 0.5 million metric tonnes is being expanded to 3 million metric tonnes by 2011.
• The company will start its new grinding unit in Mauritius this year with a capacity of one million metric tonnes. The company has got the letter of intent, after all the clearances like environment clearance, power, etc. The 1 million metric tonnes grinding unit with an investment of roughly USD 25 million will be ready by next September.
• The Mauritius unit will source clinker from Dubai and China plants and sell the cement in Dubai, Mauritius and nearby Madagascar and other countries in the Indian Ocean.
• The company has signed an MOU with the Government of Gujarat for facilitation of approvals, allocation of limestone mines etc. for the green-field project in Gujarat having 2.5 million tonnes Clinker/Cement production capacity, for which financial closure has already been done.
• The project is estimated to cost around Rs 700 crore with out the captive power plants and would be completed by end 2011.
• The company declared a dividend @ 21% (Rs 2.10 per Equity Share).
• By the year 2011 the company will have a total capacity of 14 million metric tonnes.
• The company development of 10 million tonnes reserves lignite mine at Nimbari Chandawatan, Rajasthan is moving as per planned. The plant would come up by March 2009 and after that lignite from the mine would be used for captive power plants.
• The gross debt of the company is around Rs 740 crore and the company has enough cash balance around Rs 96 crore.