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Cement demand seen improving; Q3 volume up 15% YoY: KCP

GN Murty, CFO of KCP says the company’s third quarter cement volume has grown by 15 percent YoY and 3 percent QoQ. Currently, capacity utilisation is at 50-60 percent, he adds. The first phase of sugar capacity expansion in Vietnam is almost completed and the second phase is expected to go on stream next year, he says, adding the Vietnam business is currently profitable. Below is the transcript of GN Murty’s interview with CNBC-TV18's Nigel D'Souza and Reema Tendulkar.

 Nigel: Your numbers look quite good in the past quarter. Take us through your cement business first, what exactly were the volumes and what were the capacity utilisations and have they improved now that we are one and half month into the fourth quarter?

A: Yes, the capacity utilisations are within 50 and 60 in all the quarter and on volume side there is a marginal increase in the volume in quarter three. Over two of this year the volume increase is about three percent but if you compare with the corresponding period of last year the volume increase is quite significant, about 15 percent in the quarter ending December 31. On the financials you are aware that we have declared better result compared to corresponding period of last year but compared to second quarter in the current year the profits have dipped. The profits in the current quarter was Rs 8.50 crore compared to Rs 14 crore in the second quarter of this year. But it compares better, that is profit before tax (PBT), but it compares better compared to the corresponding period of the last year. Last year the PBT was Rs 2.60 crore and the current year it is Rs 8.50 crore. There is an improvement compared to last year but compared to last quarter there is a reduction due to there is some price corrections. But on volume side yes, we improved by about three percent compared to last quarter and compared to last year it was 15 percent.

Reema: What are the early signs of Q4 volumes? Will you be able to see a 15 percent year-on-year (Y-o-Y) volume growth even in the current quarter as well as your projections for the FY17 volume growth?

A: Volume should be more or less similar to the current year other quarters but it would be marginally better than last year.

Nigel: Could you tell us also what was your earnings before interest, taxes, depreciation and amortisation (EBITDA) per tonne for your cement business, where exactly are you sourcing your power and fuel from because from there in fact it is dipping the power and fuel cost and also there was a lot of talk about new capital, Amaravati coming on stream, are we seeing any kind of incremental demand on back of that?

A: Yes, in fact the Amaravati concrete action is yet to take place on the ground. Now it is on papers. Once it takes place we are hoping that shortly in about six months something should happen in Amaravati on ground which could give some benefit to cement industry. There are a few industries nearby Amaravati, one of us - our plants are also nearby. Both the two cements plants of ours are nearer to Amaravati and we are hoping that next year something should happen and the effect could be there in the bottom-line of all the local player, not only KCP.

Reema: Can you tell us a little bit more about your Vietnam sugar business, what is the revenue, profitability you enjoy as well as the outlook for the coming year?

A: In fact in Vietnam sugar industry is more or less similar to last year. We are not hoping substantial improvement and substantial reduction also. We will be more or less similar to last year. We are expanding the capacity and the first phase of capacity expansion is almost complete and we are likely to start commissioning the operation any time now. Second phase we are going to do in the next year.

Nigel: But your Vietnam sugar business is giving a net profit currently year to date (Y-T-D)?

A: Yes. 

Source: Moneycontrol.com