“There is nothing to say. He (Radhakishan S Damani) is a respectable person who has chosen to invest in India Cements. I should not say more. This company has been around for more than 70 years. We will continue to make cement,” said N Srinivasan, MD of India Cements while addressing the media following the company’s results.
He went on to add that the “stability of management will be okay” as news surfaced about ace investor Radhakishan Damani looking to take control of the cement major.
Srinivasan did not elaborate on the details of the investment.
Damani’s family that promotes retail chain D-Mart has steadily increased shareholding in the company.
It stood at 15.16 per cent as of March 2020. Damani and his brother Gopikishan S Damani together now hold 19.89 per cent in India Cements, the Chennai-based company, according to a regulatory filing.
In its results filing, India Cements said it reported a PBT of Rs. 31.63 crores before exceptional items and a total comprehensive income of Rs 205.10 crores for the year ended March 31, 2020.
The profit before extra-ordinary items as mentioned above was Rs.32 Crores against Rs.93 Crores in the previous year and after considering the extra ordinary items and tax provision, the loss for the year was Rs. 36 crores against a profit of Rs.69 crores in the previous year.
The loss for the quarter before extra ordinary items was at Rs. 71 crore against a profit of Rs. 62 Crores for the corresponding quarter in FY 2019.
“We will recover reasonably fast from the economic aspect of the epidemic,” Srinivasan said. “Demand has been better than expected… We’ve crossed the worst.”
Given the backdrop of low demand growth further fuelled by the Covid-19 situation, the company achieved a capacity utilisation of 71% for the year as against 79% in the previous year.
The company began operations with partial lifting of the lockdown during April 2020. While the capacity utilisation for the industry as well as for the company is still below the normal levels, Srinivasan said the prices have “recovered smartly” from April 2020.
Another aspect that Srinivasan highlighted is the company not selling cement on credit any longer. He said this has helped India Cements be “more liquid” than what is what pre-Covid-19. He added that the benefits of this switch has made the company consider continuing with a no credit policy.
The drop in volume alone had accounted for a contribution loss of Rs.150 crores, he said. However, with improved variable cost the overall EBIDTA came down to Rs 613 crores as compared to Rs.669 crores in the previous year, the company said in a statement.
Extraordinary items amounting to Rs. 100 Crores represented the provision for expected credit losses in respect of some advances and receivables primarily from subsidiaries such as airlines and construction business.
However, the management is hopeful that the expected good rabi crop and the forecast of normal south west monsoon will augur well for the rural economy.
“However, given the current covid situation and the re-introduction of lockdown in certain parts of Tamil Nadu, it is very difficult to predict how the economic growth will be in the immediate two quarters. Given that India’s economy is driven by its high domestic consumption and a strong rural base, it is expected that the economy bounce back once the pandemic situation is under control,” the company’s statement said.