Prism Cement Limited today announced results for the third quarter and nine months ended March 31, 2008.

Highlights

– Quarter ended March 31, 2008

· Net Sales increased by 13% to Rs. 228.66 cr.

· Despatch Volume of Clinker and Cement up 19 % to 8,33,300 tonnes

· Net Profit increased by 16% to Rs. 64.36 cr. despite higher coal and freight costs

· The company is debt free and has liquid investments of over Rs. 240 cr. as on March 31, 2008

– Nine Months ended March 31, 2008

· Net Sales increased by 18% to Rs. 649.86 cr.

· Despatch Volume of Clinker and Cement up 17% to 22,86,234 tonnes

· Blended Cement contributed 87% of Sales

· Power Consumption down by 8% to 71 units kwh per tonne

· Net Profit increased by 41% to Rs. 180.65 cr. due to higher operating efficiencies amidst cost pressure

· Operating Margins are among the best in the industry due to better product mix, lower freight costs and brand premium

Commenting on the performance, Mr. Manoj Chhabra, Managing Director said, “Focus on niche markets and optimal product mix have enabled us to perform well despite rising costs. Major expansion plan would ensure the growth going forward.”

Industry Scenario

India is the second largest cement producer in the world with volume of around 164 million tonnes in calendar year 2007. Cement demand is driven by increasing investments in housing, commercial and infrastructure sectors. Long term average cement growth has been 1.2 x GDP.

The cement industry has registered a production growth of around 10% for the last three years. Yet the per capita consumption of around 125 kgs is substantially lower than the world average of over 260 kgs. GDP growth is expected to remain significantly high which would provide tremendous growth opportunity for the cement industry in the long term.

Company Overview

Prism Cement manufactures Portland Pozzollana Cement (PPC) with the brand name ‘Champion’ and Ordinary Portland Cement (OPC). ‘Champion’, its largest selling product, is general purpose cement mainly used in housing construction. OPC is used for specialized applications like high rise buildings, bridges, AC sheets, pipes, poles, etc.

The company has the highest quality standards due to modern plant with automated controls. The strength and other characteristics of its cement are much higher than the BIS requirements.This together with brand building exercise has placed it in the premium price segment.

The company caters mainly to markets of UP, MP and Bihar which are within the radius of 340- 360 kms of its plant at Satna, MP. Comparatively underdeveloped in terms of housing and infrastructure, these focus markets are now witnessing higher growth rates than the average of respective states. The company has strong marketing network with over 2000 dealers serviced from 46 stocking points without any wholesalers.

Capacity Expansion

The company has planned a four fold increase in cement capacity to 10 million tonnes by 2011 through brown field expansion at Satna, grinding unit at a new location and greenfield plant at Andhra Pradesh. This will also derisk its operations from single location to multi-locations. The company has been allotted a coal block in Chindwara District of MP which will commence operations by early 2011.

Business Outlook

The company is well placed to take advantage of the opportunities in the market place. It enjoys cost competitiveness due to modern plant, lower overheads, operational efficiencies and logistics management. It is ideally positioned with a strong brand name in the high potential markets of UP, MP and Bihar. Major expansion plan initiated by the company would enhance growth in coming years.

The company would sustain its industry leading profitability due to focus on high net cement realisation zone, flexible product and distribution mix (trade and non trade) and lower total delivered cost.

Sourced From: Equicorp

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