Comments
Kesoram Industries Ltd, which saw its net losses narrow to Rs 116 crore during the year ended March 31, 2023, from Rs 130 crore in FY22, expects to be back in black in the current financial year with a steady rise in the share of blended cement to its overall sales and a reduction in cost of production and distribution.
According to P Radhakrishnan, wholetime director and CEO, Kesoram Industries, the company’s EBIDTA is likely to improve to Rs 1,000-1,200 a tonne, up from Rs 600-800 a tonne, in the next three years. It also plans to bring down its debt to Rs 1,200 crore from Rs 1,700 crore, thereby reducing the cost of finance.
“We plan to pare our debt by around Rs 200 crore every year,” Radhakrishnan told BusinessLine post the company’s annual general meeting here on Wednesday.
Improved performance and moderating costs are likely to pave the way for expeditious refinancing of the current debt. The company is focused on rural market penetration and brand positioning for volume growth of blended cement. The company’s premium blended cement brand, Birla Shakti ConQUerete, would be a key driver to grow the share of blended cement in the years to come.
Expansion
The company’s cement production reduced by around five per cent from 7.42 million tonnes (mt) in 2022 to 7.03 mt in 2023. Cement sales volume also reduced by around five per cent from 7.42 mt in 2022 to 7.02 mt in 2023. However, the company expects sales volume to pick up, backed by robust demand.
The demand growth forecast for the industry is close to 10 per cent. Cement production in the country is expected to grow steadily and touch 550-600 mt per annum by 2025, the company said in its latest annual report (2023).
The demand will be driven mainly by a surging need for residential complexes for the urbanised population. An added boost would be the construction of infrastructure projects, such as airports and roads, undertaken by the government in recent times, it said.
The company’s sales volumes are expected to rise with an expanded dealer network and marketing effort through influencers and market makers. The strategy is to be a niche player in focused markets, foray deeper into blended cement markets, consolidate brand presence, prioritise use of alternative fuels, blends in manufacture, and deliver growth, it added.
Kesoram currently has a clinker capacity of around 6.2 mt and cement capacity of 9-10 mt. It plans to scale it up to 15 mt in the next five years through either brownfield or greenfield projects.
“The demand is robust... we have plenty of limestone capacity (so expanding cement capacity would not be difficult) but the first priority would be to bring in operational efficiency, bring down debt and boost our EBIDTA,” Radhakrishnan said.
The company’s scrip closed at Rs 62.75, up by 2.12 per cent, on the BSE on Wednesday.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.