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Three-way treat from Guj Ambuja

Mumbai, April 20: Gujarat Ambuja Cements (GACL) today doled out a triple bonanza for investors when it announced a bonus issue in the ratio of 1:2, split the face-value of its share to Rs 2 and announced an interim dividend of 60 per cent for the financial year ending June.

The decisions were taken today at a board meeting that considered third-quarter results ' which showed a 24 per cent rise in post-tax profit ' for the quarter to March.

The company said it saw strong demand in the months ahead, an optimism that prompted it to hand out the bonus ' the first such issue in more than six years. The stock split will improve liquidity of its shares and put it within the reach of more small investors.

The bonus issue lifted the spirit of investors, who drove up the Gujarat Ambuja stock by around 1.35 per cent on the BSE; it opened at Rs 421.70 and peaked at Rs 429.

The company said 2004-05 had been good for the economy, which helped firm up cement demand by 7 per cent in the third quarter against 2 per cent in the first.

'Cement demand picked up very well from September 2004 and has been growing at a fast clip ever since. We are witnessing good construction growth and it is expected that the growth will continue at this pace in the current financial year too. With the demand of 125 million tonnes in 2004-05 as the base, we expect demand to rise by 8 per cent for 2005-06. This will lead to stable and firm prices,' the company said in a statement.

In the third quarter, Gujarat Ambuja recorded a drop of 1.46 per cent in its net profit at Rs 143.11 crore compared with Rs 145.23 crore in the same period last year. However, its profit-after-tax went up 24 per cent to Rs 146.79 crore from Rs 118.53 crore in the year-ago period.

The gains in profit occurred despite the increase in power and fuel costs by more than 26 per cent.

The company sold 3.18 million tonnes of cement against 2.77 million tonnes in the same period last year, a rise of 15 per cent. Net sales were up 19 per cent at Rs 667.42 crore against Rs 559.29 crore during the corresponding period last year. On the other hand, operating profit was Rs 207.57 crore, down from Rs 215.61 crore.

For the nine-month period, net profit stood at Rs 346.91 crore against Rs 237.22 crore, an increase of 46 per cent.

Details available for the quarter ended December 31, 2004, show that while promoters hold 23.59 per cent in the company's equity, institutional investors own 49.52 per cent. These include mutual funds, banks, financial institutions, insurance firms and foreign institutional investors. Retail shareholders control 11.34 per cent.

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