India Cement’s net profit slips as demonetisation and GST hit

The latent effect of India’s demonetisation, a halt in cement sales ahead of the newly-introduced Goods and Services Tax (GST) roll-out and a severe shortage of river sand in Tamil Nadu, combined to put pressure on India Cements Ltd (ICL)’s profit in the April-June 2017 quarter.

ICL’s profit after tax decreased to INR264.4m (US$4.12m) in the first quarter from INR439.8m in the year-earlier period. The company reported a total income of INR14.66bn in the quarter (from INR12.06bn).

The steep increase in prices of petcoke and coal since March and the rise in staff cost due to ESOPs (employee stock option plan) provision further added to the pressure. The figures, however, are not comparable. For June 2017, the numbers also included those of the merged entities of Trinetra Cements and Trishul Concrete Products.

ICL’s Vice-Chairman and MD, N Srinivasan, said that ICL had lost a substantial volume in its main market of Tamil Nadu due to the severe sand shortage. “Things are back to normal in Tamil Nadu in the last one week or so,” he added. The higher net plant realisation (INR3604/t in Q1 compared with INR3430/t in the preceding quarter) helped mitigate the cost-push effect somewhat.