Hit hard by an 11% increase in variable costs, India Cements (ICL) has reported a meagre 3% growth in its net profit for the fourth quarter ended March 31, 2018 to Rs 35.27 crore as compared to Rs 34.28 crore in the same quarter last fiscal. The net profit for the full year declined sharply to Rs 100.62 crore as against Rs 173.35 crore in FY17.
There has been an 8% growth in volume during the quarter to 30.90 lakh tonne, as against 28.56 lakh tonne in the same quarter last fiscal, due to high variable costs as well as a marked reduction in net plant realisation. The EBITDA margin during the quarter stood a percentage point down to 13% as against 14% in the same quarter last fiscal, i.e. Rs 722 crore against Rs 869 crore in the Q4 of FY17. The total income for the full year declined to Rs 5,360.13 crore as against Rs 5,794.03 crore in the previous fiscal.
The net plant realisation during the quarter under review was lower at Rs 3,360 as against Rs 3,430 in Q4 of last fiscal, said senior officials of the company here on Friday.
During the quarter, the total income dropped to Rs 1,401.73 crore as compared to Rs 1524.29.
Addressing a press conference, N Srinivasan, vice-chairman and managing director, ICL, said: “The performance during the quarter as well as full year was considered to be satisfactory given the huge challenges the industry had to face and the tougher market conditions in the south arising out of regional imbalances in capacity.”
According to Srinivasan, the latent effect of demonetisation, teething troubles arising out of GST rollout, RERA impact, restrictions/ban on sand mining in important states like Tamil Nadu coupled with a marked rise in petcoke (the raw material), all these, were compounded by an increase in customs duty on petcoke, which led to an 11% increase in variable costs, and hence, impact on EBITDA and profits.
Due to a marked increase in raw material — petcoke — from $65 a tonne at the beginning of year to $120 a tonne by Q4, the company had to incur a per tonne variable cost of Rs 240 or around Rs 150 crore. This is despite a gain of Rs 50 crore through increase in volume. The company had lost Rs 20 crore in net plant realisation, he added.
Though the industry has not grown in the first half of FY18, it managed to recover in second half with 6.3% growth. India Cements, in particular, saw 8% growth in Q4, considered to be remarkable given the tight situation over previous three quarters.
Srinivasan said: “Our capacity utilisation has gone up to 79% in Q4FY18 as compared to 71% in Q4FY17. However, the NPR has substantially came down due to varied reasons. We hope to do better and our capacity utilisation during FY19 will be around 80%, especially Q4FY19 will be much better than the first three quarters, as demand for cement is picking up in states such as Andhra Pradesh, Telengana, Maharashtra, Karnataka, as these states embarked upon a number of projects including roads, dams, irrigation, infra development among host of others.”