India Cements has reported a net loss of Rs 24 crore for the fourth quarter ended March 2022 as against a profit of Rs 72 crore in the corresponding year-ago period due to almost five-fold increase in coal prices and loss of volume.
“Fourth quarter was a disappointing as well as a fighting quarter. Coal, which we were importing, went up from $60 per tonne to almost $300 per tonne. We could do nothing but sit and watch. I wanted to increase the price, but it was not possible,” said N Srinivasan, vice-chairman and managing director.
The sales volume in the South was impacted by the pandemic and unseasonsal rainfall. During the period under review, revenue from operations contracted 4% to Rs1,392 crore from Rs 1,450 crore. India Cements sold 26.29 lakh tonne of cement (against 26.66 lakh tonne in the same quarter last year) and 0.28 lakh tonne of clinker (against 3.24 lakh tonne in the corresponding period last year). The overall volume was at 26.57 lakh tonne, registering a drop of 11% as compared to 29.90 lakh tonne in the previous year.
The company’s variable costs of production during the quarter had gone up 33% as compared with the previous year while the net plant realisation could pick up only 6.8%, resulting in an erosion of margin.
The increase in variable costs could not be passed on to the market for reasons already stated. The un-recovered increase in the variable costs alone resulted in a loss of contribution of over Rs 500 per tonne or aggregating up to approximately Rs 135 crore, which was the primary reason behind the reduction in Ebidta. This was further compounded by the loss of volume. However, with a tight control on fixed cost and administrative and marketing overheads, the company could still achieve an Ebidta of Rs 66 crore as compared to Rs 212 crore in the corresponding quarter of the previous year.
On the outlook front, he said, recovery is challenged by heightened global risks stemming from Ukraine crisis, worsening supply disruptions, spike in international energy and commodity prices, volatile crude oil prices and elevated inflation. The cost pressure is expected to mount on the industry with higher fuel and commodity prices, besides the increased power tariffs and logistics costs.
With house building and construction activity expected to continue and the Centre and states giving a push to infrastructure spending and affordable housing, there is room for cautious optimism for cement demand in the near future, he said.
