Ambuja Cements Ltd, the fourth-biggest cement maker in the country, said first-quarter profit rose 43% on higher prices.
Net income increased to Rs590 crore, or Rs3.89 a share, in the three months ended March 31, from Rs413 crore (Rs2.72 per share) a year earlier, the Mumbai-based company told the Bombay Stock Exchange on 20 April 2007. The company, earlier known as Gujarat Ambuja Cements Ltd, has consolidated its group companies to form Ambuja Cements Ltd.
Sales for the company rose to Rs1,430 crore from Rs1,070 crore. Other income jumped to Rs266 crore from Rs57.1 crore a year earlier, and included a one-time gain of Rs241 crore from the sale of an 11% stake in Ambuja Cement India Ltd to Holcim.
The company said total expenses for the quarter rose to Rs870 crore from Rs704 crore. The company paid Rs177 crore as taxes. The company said it had a tax write-back of Rs53.4 crore in the year earlier period.
“This is best quarter that the company has seen in its history,” said Satish Kumar, an analyst at Mumbai-based Brics Securities Ltd. “I don’t think the company will see such earnings after this quarter especially as companies have agreed to freeze prices and the government-imposed restrictions on the cement sector.” Kumar rates the stock a “sell”.
Cement makers including Ambuja agreed on 9 March 2007 to hold prices even if input prices rise after a row with the government over taxes and record-high cement charges. Prices of the building material rose 30% from April 2006.
Rising retail cement prices have been a concern for the Central government struggling to slow inflation from near a two- year-high. Cement and cement-related products, including asbestos cement corrugated sheets used as roofing material in rural India, together account for a 2.16% weighting on the wholesale price index.
Ambuja Cements said it has appointed A.L. Kapur as Managing Director. Kapur, a director on the company’s board, is 72 years old and will replace Anil Singhvi, who has worked with Ambuja for 21 years. It did not give reasons for the change.
Shares of Ambuja Cements rose Rs2, or 1.8%, to Rs115.45 on the Bombay Stock Exchange. The stock, among the best performers on the Bombay exchange last year, has fallen by 18% this year compared with the benchmark Sensitive index’s 0.8 % rise.
Ambuja Cements Ltd., which in February sold 95 lakh shares, or a third of its 33% stake in Ambuja Cement India for a profit of Rs241 crore, said it will sell another 95 lakh shares to Holcim Ltd. for Rs535 crore on 30 April 2007.
Ambuja Cement India is the holding company through which Holcim and Ambuja own stakes in ACC Ltd., India’s biggest cement maker. Ambuja said it will sell its remaining 11% in Ambuja Cement India on 30 April 2008, for Rs589 crore.