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Birla Corporation, the MP Birla Group flagship company, registered a 56 per cent drop in consolidated net profit at ₹62 crore for the quarter ended June 30, 2022, as compared with ₹142 crore in the same period last year.
Profitability was dented by escalating power, fuel and freight costs. Costs of optimising the subsidiary RCCPL Private Ltd’s newly-commissioned Mukutban plant in eastern Maharashtra also had a major impact on overall profitability, broadly in line with the management’s internal projections, the company said in a statement.
Consolidated revenue from operations went up by 26 per cent at ₹2,218 crore during the quarter under review as compared with ₹1,758 crore in the same period last year.
EBITDA performance
The company’s EBITDA including Mukutban was down by 22 per cent at ₹2,73.61 crore while excluding Mukutban, it was down by around 12 per cent at ₹312.19 crore (₹352.90 crore) during the period under review. Only figures excluding Mukutban are comparable with those of last year.
Commercial production at Mukutban started on April 30, 2022, and the management has drawn up a detailed plan to ramp up production over the next few quarters. It is expected that the plant will break even at the EBITDA-level by the end of the current financial year, it said.
At peak capacity, the plant is expected to produce 3.9 million tonnes of cement a year, and scale up the company’s total production capacity by nearly 20 per cent to almost 20 million tonnes.
“As regards tax incentives, the total entitlement is based on the capital expenditure incurred for the Mukutban project. The incentive will be granted by way of 100 per cent reimbursement of SGST, electricity duty and royalty on limestone paid by the unit,” it said.
The company added, “Incentives on account of SGST reimbursement will start to accrue after the exhaustion of the input tax credit on capital expenditure from FY23-24. It will significantly boost the company’s profitability.”
Stats on Mukutban
All units combined, the cement division’s EBITDA per ton plunged by nearly 36 per cent to ₹645. However, if adjusted for the start-up costs of Mukutban, the division’s profitability for the June quarter, expressed as EBITDA per ton, remained more or less unchanged at ₹751, compared to ₹755 for the full financial year ended March 31, 2022, despite intensifying cost pressure.
Though the company managed to improve realisation from cement sales for the June quarter by nearly 8 per cent over the same period last year to ₹5,311 per ton, it was not enough to offset the 79 per cent year-on-year increase in fuel costs.
On a sequential basis, fuel costs have gone up by 21 per cent in the June quarter. Combined with an across-the-board increase in commodity prices, the overall cost for the June quarter went up by 19 per cent over last year to ₹734 per ton.
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