Maple Leaf is writing a high revenue growth and controlled overheads story within the cement sector. Perhaps still a little behind the top 2-3 players in the sector, the company has seen strong increase in dispatches so far into the current fiscal year celebrating an 8 percent growth in the top line. This is in line with the local demand of dispatches that has on average grown by 8-10 percent, particularly in the northern markets.
The company’s 9MFY17 financials show a similar increase in costs—possibly due to the turnaround in coal prices—and as a result, margins were improved to 42 percent, from 41 percent in 9MFY16. The company commissioned a captive power generation plant through its subsidiary which will start producing electricity of 40 MW in the coming months. This would reduce pressure on power costs that take up a bulk of the cost of production.
Meanwhile, Maple Leaf has also placed its order for a third production line with a Danish company. The plant has a capacity of 2.19 million tons and will start manufacturing by FY19. The current capacity share in the industry for Maple Leaf is 7.2 percent and with nearly 30 million tons more of capacity being added into the sector, Maple Leaf’s expansion would allow it to maintain its market share. That’s a good bet as many companies that are not expanding will see their market share plummet given so many others are enhancing their reach.
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