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ACC: Operating margins take a dip

Jun 1, 2000

Associated Cement Companies (ACC) has reported a 2% drop in operating margins during the year ended 31st March 2000. The company has suffered from a faster increase in expenditure. Other factors that contributed to the company’s disappointing performance include a 58% decline in other income. These factors resulted in the company posting a loss for the current year.

(Rs m)FY1999FY2000Change
Sales 26,091 27,601 5.8%
Other Income 1,384 586 -57.7%
Expenditure 23,969 25,912 8.1%
Operating Profit (EBDIT) 2,122 1,688 -20.4%
Operating Profit Margin (%)8.1%6.1% 
Interest 1,625 1,618 -0.4%
Depreciation 1,038 1,245 20.0%
Profit before Tax 843 (589) 
Tax 75 -  
Profit after Tax/(Loss) 768 (589) 
Net profit margin (%)2.9%-2.1% 
Earnings per share4.16 NA  

The company’s cement business has recorded a growth of 7% in volume terms. That the topline has not grown by a similar amount reflects that cement realisations continued to be under pressure during the year.

The company has stated that it has initiated a restructuring exercise which will see it divesting its non cement businesses. The move should augur well for the company which has interests in, among others, a tyre company and a company manufacturing wind shields for cars. The disinvestment would also raise funds, which could be utilised for its current capital expenditure plans, or for paring down debt levels.

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