MOSL: ANNUAL REPORT THREADBARE (ART) | J K LAKSHMI CEMENT-Weak performance dents ROE
ANNUAL REPORT THREADBARE (ART) | J K LAKSHMI CEMENT: Weak performance dents ROE
JKLC’s FY16 annual report highlights a weak operating performance, with EBITDA declining 23% to INR2.7b (FY15: INR3.5b) on the back of an 8% cut in realizations to INR3.6k/tonne, but volumes growing 23% to 7.3 MMT. Rising finance cost and depreciation post capitalization of the Durg plant led to a pre-tax loss of INR0.4b (FY15 PBT: INR1.1b). However, the company recognized DTA worth INR0.5b on unabsorbed depreciation to report PAT of INR0.2b (FY15: INR1.1b). FCF remained negative due to high capex and deterioration in the cash conversion cycle to 18 days (FY15: 3 days). D/E increased to 1.7x (FY15: 1.5x). RoCE/RoE declined to 5%/1% due to rising capital intensity and a weak performance. Together with other subsidiaries, JKLC’s exposure to its subsidiary, Udaipur Cements Works (a sick company earlier), grew to INR5b (FY15: INR1.5b). Adjusted contingent liabilities increased to INR2.9b, 22% of net worth (FY15: INR1.5b), primarily due to fresh excise duty notices worth INR1b.
Operating performance remains weak: EBITDA fell 23% to INR2.7b (FY15: INR3.5b), as healthy 23% volume growth (contribution from the Durg plant visible in FY16) was offset by a steep 8% cut in realizations to INR3.6k/ tonne (FY15: INR3.9k). Further, EBITDA declined to INR370/tonne (FY15: INR 593/tonne), which is lower than peers.
JK Lakshmi Cement is engaged in the manufacture of paper, cement, magnetic tape, polyester staple fiber and polyester filament yarn. Through its subsidiaries, Co. is also engaged in the manufacture of iron and steel and the provision of financial and investment services. Co. exports paper to Malaysia, Singapore, Sri Lanka, Bangladesh, Africa and the Middle East. Co. manufactures JK Laser, copier paper for laser printer, Chancellor Bond, JK Compac for computer stationery, Grade 43 cement and paper for packaging and books. Co. also exports audio tapes and is a supplier to recording companies. In addition, Co. exports fibers to Germany, Belgium, Egypt, Bangladesh and Russia.
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