M P Birla group flagship, Birla Corporation, reported a 59.3 per cent drop in net profit to Rs 60.45 crore in the December quarter as cement demand contracted in key markets. Net profit in the year-ago period was at Rs 148.42 crore.
Revenues for the quarter dipped from Rs 1,823 crore to Rs 1,757 crore as sales volume dropped by 5.6 per cent. This translated into lower capacity utilisation of 86 per cent for the December quarter against 92 per cent a year earlier, the company said.
However, the company said that it was able to shore up realisation per tonne by 3.4 per cent, from Rs 4,739 in the year earlier to Rs 4,899 in the December quarter.
The company also said that profitability of the cement division for the December 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 Rs 992 to Rs 638.
On demand, the company mentioned in its commentary, unseasonal rainfall impacted demand in the north, but the eastern region (states such as Bihar and West Bengal) were the worst in terms of demand due to continued restriction on sand mining for a major part of the quarter and extended monsoon. Demand in the central region, which is the biggest market for Birla Corporation, also remained sluggish.
However, the company said that conditions look favourable for a quick recovery in demand, except in Uttar Pradesh where state elections could hobble construction activities till mid-March.
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