Ramco Cements has successfully resolved a significant legal dispute regarding the disallowance of CENVAT Credit on Outward Freight, marking a positive development for the company's financial outlook.

Legal Dispute Resolution

The cement manufacturer announced that its appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was remanded back to the Original Authority, namely the Assistant Commissioner of GST and Central Excise, Villupuram. Following this, the Original Authority issued an order on August 11, dropping further proceedings related to the dispute.

This resolution effectively settles the matter, which was valued at Rs. 1.11 Crores. The company received the order via email at 4:08 PM on the same day, bringing closure to this long-standing issue.

Reduction in Pending Disputes

In a broader context, Ramco Cements also reported a notable decrease in similar pending disputes with various statutory authorities. The total value of such disputes has been reduced from Rs. 8.00 Crores to Rs. 6.89 Crores, indicating progress in resolving multiple legal challenges.

Compliance and Disclosure

The company's announcement aligns with its obligations under Clause 8 of Para B, Part A of Schedule III, read with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. It also adheres to SEBI Circular No: SEBI/HO/CFD/PoD2/CIR/P/2023/120 dated July 11, 2023, which mandates disclosures on ongoing material litigations.

Impact and Outlook

The resolution of this dispute and the reduction in overall pending litigation value represent positive developments for Ramco Cements. These outcomes are likely to contribute to improved financial stability and potentially reduce legal expenses for the company moving forward.

Investors and stakeholders may view these developments favorably, as they demonstrate the company's ability to navigate and resolve regulatory challenges effectively. The successful resolution of such disputes can enhance a company's regulatory compliance profile and potentially improve its standing with regulatory authorities.

As Ramco Cements continues to address its remaining legal challenges, the market will likely monitor the company's progress in further reducing its litigation exposure and the potential impact on its financial performance.

Ramco Cements , a leading player in the Indian cement industry, has reported a significant increase in profitability for the first quarter, despite a marginal decline in revenue. The company's financial results showcase its resilience and operational efficiency in a challenging market environment.

Financial Highlights

• Net Profit: The company's net profit surged to ₹860.00 million, marking a substantial 142% increase from ₹355.00 million in the same period last year.
• Revenue: Total revenue slightly decreased to ₹20.70 billion, down from ₹20.88 billion year-over-year, representing a marginal decline of 0.86%.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) improved to ₹3.98 billion, up from ₹3.19 billion in the corresponding quarter of the previous year.
• EBITDA Margin: The EBITDA margin expanded significantly to 19.23% from 15.30% in the prior year period, indicating improved operational efficiency.

Operational Performance

Ramco Cements' operational performance during the quarter includes:

• Cement Sales Volume: 4.00 million tons, compared to 4.29 million tons in the same quarter last year, representing a 6.76% decrease.
• Capacity Utilization: Decreased to 68% from 77% in the previous year, partly due to weak demand and additional capacities created through debottlenecking.
• Construction Chemicals: This business segment showed strong growth, with sales volume increasing to 1.20 lac tons from 0.67 lac tons, a 79.10% year-on-year growth.

Factors Affecting Performance

1. Demand Challenges: Early monsoon rains in Kerala and the completion of many infrastructure projects in eastern markets impacted cement demand.
2. Pricing Improvement: Despite lower volumes, improved cement prices contributed to the profitability boost.
3. Cost Management: The company managed to reduce power and fuel costs per ton of cement from ₹1,300.00 to ₹1,222.00.
4. Raw Material Costs: Increased by 7% year-on-year, partly due to the new Mineral Bearing Land Tax in Tamil Nadu.

Strategic Initiatives

• Capacity Expansion: Ramco Cements aims to achieve a cement capacity of 30 MTPA by March 2026, including the commissioning of a second line in Kolimigundla.
• Green Energy: Plans are underway to commission additional Waste Heat Recovery System (WHRS) capacities, enhancing the company's focus on sustainable energy sources.
• Non-Core Asset Disposal: The company has monetized ₹501.00 crores out of a targeted ₹1,000.00 crores in non-core assets, with the remainder expected to be completed by September 2025.

Management Commentary

M.F. Farooqui, Chairman of Ramco Cements, stated, "Our focus on operational efficiency and strategic pricing has enabled us to deliver strong profit growth despite challenging market conditions. The significant improvement in our EBITDA margin reflects our ability to manage costs effectively while maintaining product quality."

Outlook

While Ramco Cements faces short-term challenges due to market conditions and regulatory changes, the company's strategic initiatives and focus on operational efficiency position it well for future growth. The expansion of capacity, investment in green energy, and strong performance in the construction chemicals segment are expected to drive long-term value for shareholders.

Investors and analysts will be watching closely to see how Ramco Cements navigates the evolving market dynamics and capitalizes on infrastructure growth opportunities in the coming quarters.