ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Cost Squeeze

Hansavivek MANGALAM CEMENT, which cleared arrears of preferential dividends last volar, has annonced a maiden equity dividend of 12 per cent for 1983. The company has produced good working results, with increase in production of cement from the previous year's 2,28,721 tonnes to 3,00,144 tonnes, and increase in capacity utilisation from 57 per cent to 75 per cent. Sales realisation amounted to Rs 20.58 crove against Rs 14.89 crore previously, while gross profit was Rs 4.06 crore against Rs 3.62 crore. These figures reflect a notable fall in profit margins. After providing Rs 2.73 crore (Rs 1.59 crore) for depreciation, net profit has turned out to be lower at Rs 1.33 crore (Rs 2.03 crore). Equity distribution is thus covered 1.87 times by earnings. Production would have been substantially higher, but for the excessive power shortage in the first half of the year. With the commissioning of two imported diesel generating sets, the company has been able largely to over come power problem, although violent voltage fluctuations and too many power interruptions still continue which not only adversely affect output but also cause damage to plant and machinery. There has been further deterioration in the quality of coal. Directors point out that caloric value is very low with high ash, shale and content moisture. They attribute deterioration of margins in spite of the higher production to the steep rise in costs of important inputs such as power, coal, stores and spares, and salaries and wages. Average power rate per KWH increased 'from 33 paise to 52 paise, and the average factory landed cost of coal per tonne from Rs 295.10 to Rs 379.23. Recent increase in the rate of coal by about 25 per cent will also adversely affect profits in the current year. there is one good news. Government has acceded to the company's request for treating its plant as a new unit for purpose of determining levy quota. Accordingly its levy quota has been reduced. The benefit of this will accrue to company in the current year. Government, however, has not so far granted any increase in the price of levy cement since the announcement of new pricing policy on February 28, 1982. Prices of non-levy cement have also declined lately. The final award of the board of arbitration for the cement industry

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Back to Top