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India Cements has reported a lower net loss of ₹81 crore for the quarter ended September 30, 2023, when compared with a net loss of ₹138 crore in the year-ago period. However, the company has reported a positive EBIDTA for the quarter and said it saw the prospects to post a net profit in the coming quarters, supported by firm better realisations and softening of cost-side pressures.
Its performance has been impacted due to supply overhang in the southern region. Though demand levels in southern and northern regions are almost the same, a huge surplus capacity in the South resulted in pricing pressures and lower capacity utilisation. Also, cost increases, as a result of a spike in coal prices in the recent quarters, increased its cost of production, thereby impacting its margins.
However, with cost-side pressures easing with the fall in coal prices in recent weeks, the operating margins are expected to improve. India Cements has seen a drop in production cost per tonne to ₹3,000 (₹3900).
The company’s EBIDTA for the second quarter of this fiscal stood at ₹14 crore as against a negative EBIDTA of ₹87 crore in the year-ago quarter amid restricted operations caused by the stressed working capital position.
Total income stood at ₹1,228 crore (₹1,259 crore). Cement volume was 23.70 lakh tonnes (22.54 lakh tonnes).
‘Better quarter’
“This is a better quarter, as prices went up and costs came down. With coal prices coming down, it will augur well for the company. We hope the cement prices will remain firm if not increase further. With further reduction in variable cost, improving liquidity, and capacity utilisation, we hope to return to black soon,” said N Srinivasan, Vice-Chairman & Managing Director, India Cements.
The company is in the process of raising funds through the sale of some lands to augment working capital needs and take up refurbishment of cement units.
Since this process appears to take more time than expected, India Cements has decided to recover the ICDs (inter-corporate deposits) and advances given to its group companies. It requires ₹250-300 crore for working capital in the short term. In this fiscal, it has recovered about ₹115 crore in advances from group Companies and will recover more to ease its liquidity position.
Meanwhile, the company has also reduced its debt by about ₹140 crore and its debt stood at ₹2,807 crore as of September 30, 2023.
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