M P Birla Group company Birla Corporation Limited on Wednesday said it has invested Rs.100 crore in Reliance Cement Company Private Limited (RCCPL) during December quarter this fiscal, which became its wholly-owned subsidiary from August last year. The company further said the ongoing efforts to integrate the subsidiary’s operations with it and realise synergy benefits have already started yielding benefits.
Birla Corporation had acquired 100% equity shares of RCCPL (Reliance Cement) from Anil Ambani-led Reliance Infrastructure for an enterprise valuation of about Rs 4,800 crore. It has started the exercise of re-branding of the ‘Reliance Perfect Cement’ brand as ‘MP Birla Perfect Cement’.
In a stock exchange filing, the Kolkata-based cement major said, “During the (third) quarter the company invested a sum of Rs.100 crore by subscribing to 1 crore preference share (10% redeemable cumulative preference shares of Rs. 100 each), redeemable after expiry of five years, in its wholly-owned subsidiary Reliance Cement Company Private Limited.”
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The entirely new cement brand, MP Birla Perfect Cement, was launched last month in the fast-growing Central India market. “The campaign has been well received in the markets. The initiative is expected to provide impetus to increase volumes and maintain the premium pricing of the brand in the trade segment,” the company said in a release.
This new cement is being manufactured at RCCPL’ cement units– an integrated cement plant at Maihar (Madhya Pradesh) and grinding units at Kundanganj (Uttar Pradesh) and Butiburi (Maharashtra). Additionally, the MP Birla Group company has cement manufacturing operations in Satna (MP), Raebareli (UP), Chanderia (Rajasthan) and Durgapur (West Bengal).
After the acquisition, the company’s total cement production capacity rose to 15.5 million tonnes per annum (MTPA) from about 10 MTPA.
During the third quarter ended on December 31, 2016, however, revenue of the company fell by around 9% to Rs. 832 crore and cement dispatches were lower by 11% at 17.47 lakh tonnes, compared to the corresponding period the previous year, primarily by the effect of demonetization in the key markets of North and Central India where the company’s operations are concentrated.
Birla Corporation posted a 85% year-on-year dip in its net profit to Rs. 2.09 crore for the December quarter this fiscal from Rs. 13.99 crore for the corresponding period a year ago. The company attributed the fall in net profit to higher borrowing costs on account of acquisition of RCCPL and reduction of treasury income as internal accruals were utilized to fund the acquisition.
Total income from operations also decreased by over 8% y-o-y at Rs. 848.93 crore against Rs. 923.47 crore in the year ago period. The company said despite the fall in revenues, EBIDTA during the quarter under review were almost flat (YOY) at Rs 57.96 crore.