The loss-making India Cements on Monday said the company requires at least Rs 400 crore immediately to tide over the liquidity crunch. The company has planned to monetise some of the non-core assets for meeting the minimum capital expensesfor which the process is underway.
N Srinivasan, vice chairman & MD, India Cements told select media persons that to tide over the liquidity crunch, the company needs Rs 150 crore as working capital and another Rs 250 crore for capex. It hopes to raise Rs 100 crore working capital over the next two weeks’ time. As of June 30, the company had a debt of Rs 2,940 crore.
In the first quarter of FY23, India Cements reported a standalone loss of Rs 75.27 crore as compared to Rs 76.09 crore net profit in the same quarter last year, owing to reduction in selling price and loss of volume. However, the company could narrow the lossses sequentially where it had recorded losses to the tune of Rs 218 crore in the March-ended quarter of FY23. India Cements’ total income for Q1FY24 stood at Rs 1,399.91 crore as against Rs 1,454.27 crore, posting a drop of 3.7%.
During the quarter, cement price was stagnating while operating cost scaled up. “We will be able to bounce back to black very soon, with required working capital availability and operating efficiency at the plants being achieved over a period of time,” he said.
Speaking after releasing the first quarter results of the company, Srinivasan said Boston Consulting Group had made a detailed presentation for reducing cost per tonne which would help the company achieve better margins. Earlier, India Cements had engaged FLSmidth and Krupp Polysius for recommending measures for refurbishment of its old plants which would result in higher operational efficiency.
He said the net plant realisation in Q1 was at Rs 3,965 per tonne compared to Rs 4,112 in the same quarter in FY23 and Rs 3,949 per tonne in the previous fourth quarter of last fiscal.
The variable cost continues to be high for the company as compared to the peers and the company has initiated necessary action to address the same. The new cement mill at Sankar Nagar, replacing old in-efficient cement mills, is likely to be commissioned by second quarter of the current fiscal.
The cement sales for the quarter was only 26.57 lakh tonnes as compared to 27.85 lakhs tonnes in the previous quarter. The low sales was due to liquidity crunch faced by the company consequent to lower margins and losses. “ We could not produce more due to working capital crunch which was the triggered by the losses in the last three quarters,” he said.
Srinivasan said the cement industry in the South has built adequate capacity to meet the healthy demand from housing and infrastructure sectors. However, margins are expected to come under pressure with rising operational costs, intense competition in the market, logistics and supply chain constraints.