India Cements’ net loss for the fourth quarter of 2022-23 came in at ₹217.19 crore, widening from ₹23.71 crore in the corresponding quarter of the previous year, owing to an amount of ₹113.83 crore representing impairment of the company’s investment in the Andhra Pradesh Gas Power Corporation, whose operations have been suspended.
In October 2022, India Cements gained ₹294.28 crore by way of profit on sale of its investments in Springway Mining. The net effect of the two ‘exceptional items’ was a gain of ₹180.25 crore. Despite this gain, the company made a net loss of ₹188.22 crore (₹231.11 crore profit) for 2022-23. This was due to rise in input costs.
India Cements’s Vice Chairman and Managing Director, N Srinivasan, said the company would raise around ₹1,200 crore by selling off a part of its lands, to improve liquidity and finance working capital requirements. As on end March 2023, the company had debt of ₹2,900 crore
Loss factors
Softening of prices of raw materials such as pet coke is expected to help the company reduce its variable cost, while the company is planning to increase cement sales as the demand continues to improve. Without price increases, these steps are expected to help India Cements improve margins and generate profits in the coming quarters. Capacity utilisation improved to 72 per cent in the March 2023 quarter (up from 60 per cent in previous quarters) and will cross 80 per cent in the coming quarters.
Srinivasan said the company’s performance in March 2023 quarter and FY23 were hit by unprecedented cost increases and supply constraints. This was also compounded by one-off charges on account of impairment of certain investments and advances amounting to about ₹114 crore (this was to some extent compensated by the profit on sale of investments).
For the full year FY23, the company’s net loss stood at ₹189 crore (₹39 crore loss) . Revenue grew by 14 per cent to ₹5,381 crore from ₹4,713 crore.
While there was the erosion of margins for the industry in general, with the steep increase in cost, the impact was higher in India Cements when compared with its peers on account of the higher cost of production by its vintage factories.