Dragged down by lower demand and decline in capacity utilisation, Birla Corporation Ltd registered 59 per cent drop in consolidated net profit at ₹60 crore for the quarter ended December 31, 2021, as compared with ₹148 crore same period last year.

Consolidated revenue from operations declined by nearly two per cent at ₹1,750 crore(₹1,777 crore).

There was an estimated six per cent decline in cement demand in some of the key markets, the company said in a press statement.

Sales by volume in the December quarter was at 3.35 million tonnes against 3.55 million tons a year earlier—a drop of nearly six per cent. This translated into a lower capacity utilisation of 86 per cent for the quarter against 92 per cent a year earlier.

“Even amid unfavourable market conditions which impacted all cement makers, the company was able to shore up realisation per ton by 3.4 per cent, from ₹4,739 in the year earlier to ₹4,899 in the December quarter. It stands out as an achievement in the light of the decline in sales of premium and high-yielding blended cement during the quarter,” the release said.

Profitability during the quarter was seriously impacted by weak demand and a sharp rise in variable costs. Power and fuel cost per tonne went up by 39 per cent year-on-year and 20 per cent sequentially. EBITDA per tonne for the cement division was down 36 per cent from the year earlier, from ₹992 to ₹638.

The company has been taking steps across functions to mitigate the impact of rising commodity prices. These include significant scaling up of captive coal mining; transportation of fly ash in containers was increased at Maihar, the company’s largest plant, to reduce costs. Cost of distribution was under huge pressure due to the spurt in the price of diesel but effective measures were taken to rationalise distribution costs.

Sales of premium cement by volume fell to 50 per cent for the December quarter from 53 per cent in the year earlier, largely on account of a fall in demand from the housing sector, which was impacted by weakness in the rural sector and unseasonal rainfall. The share of blended cement in overall sales fell from 91 per cent to 88 per cent year-on-year because higher proportion of sales during the quarter was made to the infrastructure sector, which mostly consumes OPC (Ordinary Portland Cement).

The company expects a recovery in demand in a majority of its markets moving forward except in Uttar Pradesh where state elections could hobble construction activities till mid-March.

“The rabi crop has been good across all key markets and it is expected to translate into robust demand. Cement prices have been raised effective third week of January, and prices, going forward, are expected to remain firm. As always, the company is looking to shore up sales of its premium and blended cement, and expand its distribution reach within key markets. However, input costs remain a red herring and could impact profitability,” it said.

In January, the company’s wholly-owned subsidiary, RCCPL Private Ltd, has fired the kiln at its new plant at Mukutban in eastern Maharashtra. It is the fourth integrated cement unit with a production capacity of 3.9 million tonnes. The company has already started to develop a market for its brands in the west, where it had a toehold, thanks to the Butibori grinding unit.

With the commissioning of the Mukutban plant, the company’s total production capacity will go up to almost 20 million tons a year.

Petitions dismissed

Meanwhile, Birla Corporation, on Friday said that the Supreme Court has dismissed petitions alleging that Harsh Vardhan Lodha had failed to comply with a Calcutta High Court verdict by continuing as the Chairman of MP Birla Group Companies.

The apex court had on July 12,2021 passed an order on a petition filed by Birlas, upholding an earlier ruling of the Calcutta High Court that Lodha could continue as the chairman and director of MP Birla group companies even in the wake of a judgement passed by Justice Sahidullah Munshi (now retired) in September 2020.

“Despite the charges of contempt being demolished in the highest court in July last year, two members of the APL Committee strangely filed another petition in Supreme Court in November last year with the same allegations without taking leave of the Calcutta High Court. The second attempt to dislodge Mr Lodha was again nipped in the bud,” the company said in a statement.

The company’s scrip closed at ₹1355.30, down by 0.29 per cent on the BSE on Friday.

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