Birla Corporation, on Friday, posted its best ever pre-tax profit in a quarter helped by volume growth and higher realisations from cement sales. The company's pre-tax profit jumped Rs 89 crore in the June quarter (Q1) to Rs 219 crore, rising 147 per cent.
The M P Birla Group flagship company’s June quarter net profit jumped 68 per cent to Rs 141 crore, while Q1 EBIDTA stood at Rs 402 crore – a 49 per cent increase over the corresponding period last year. Revenue jumped by 14 per cent to touch Rs 1,844 crore.
Aggressive pricing in key markets and upgrading consumers to premium brands helped the company have a larger play in both volume, which increased by four per cent in the quarter under review, and pricing, while maximisation of sales of blended cement ensured better margins.
Even as the company focussed on the individual home-builder segment, pushing its sales via trade channels, a major thrust was given to sales of premium brands, which accounted for 37 per cent of total cement sales through trade channels and registered a 12 per cent growth on a year-on-year basis. The share of less profitable non-trade channels fell from 21.2 per cent to 17.7 per cent over the last year, directly boosting profits.
“The results are a reflection of our long-term strategy of enhancing profitability and competitiveness with the aim of becoming one of the best-in-class players in the industry. We have also increased our leadership bench strength and built all-round competencies in preparation for our next phase of growth”’, chairman Harsh V Lodha said.
Following encouraging results of test-marketing in Madhya Pradesh and Uttar Pradesh, the company’s MP Birla Cement Perfect Plus range of wall putty and construction chemicals was launched in Rajasthan as well. The company is of the view that apart from increasing the share of wallet, these brand extensions are expected to supplement the equity of the Perfect Plus franchise.
Over the years, Birla Corporation has been focussing on several cost reduction measures including operational and fuel efficiency. The Waste Heat Recovery System in its Maihar has been commissioned while solar power projects in Chanderia, Satna and Maihar, for a total capacity of 16 MW is in progress. Alternative fuels are being tied up through long-term contracts to ensure continuity of supplies and reduction of costs.
Also, the company is doubling captive coal production in the Sial Ghogri mine which currently meets one-third of the fuel requirement of the Maihar unit. The rest of the requirement is fed by coal auctions and linkage auctions.
According to the company, Softening of pet coke prices, better availability of auction coal from linkage auctions and ramping up of production at the captive coal mines is expected to lower power and fuel costs in the coming quarters.
Besides, for the Rs 2450 crore Mukutban project, the company was able to negotiate an interest rate lower than nine per cent from a consortium of four banks who are funding this project.