According to newspaper reports Gujarat Ambuja Cements Limited (GACL) is likely to record a 120% jump in net profits for the second quarter ended 31st December 1999.
GACL is the largest manufacturer of cement in Gujarat and Punjab. It is India's most efficient cement manufacturer due to high degree of mechanisation in its products and mining activities. It has controlled freight costs by moving bulk of its production through the sea route.
The report, quoting analysts, has stated that the improvement in cement prices in the western and northern markets will boost the bottomline of the company. However, volume sales at GACL have suffered in November and December. Added to this is the hike in fuel costs that has increased operating expenditure. The company is however likely to make up for this by improved operational efficiencies.
Gujarat Ambuja will however not have to bear the interest burden on the debt taken for its recent acquisitions in this quarter. Subsequently, this factor could have significant implications for the bottomline of the company.
The expected strong growth in profits comes amidst the disappointing results posted by other cement companies including ACC and L&T. The company has over the years been able to sustain its bottomline despite dull market conditions mainly due to high cost efficiencies. Infact, the company is one of the most efficient cement producers in Asia.
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