India Cements Q2 net at Rs 71.43 cr while revenue drops to Rs 1,069.72 cr

India Cements' profit rose to Rs 71.43 crore during the second quarter from Rs 8.72 crore, a year ago, while revenue dropped to Rs 1,069.72 crore from Rs 1,245.72 crore, a drop of 14 per cent.

The drop in volume by 21 per cent year on year meant a loss of more than Rs 68 crore in contribution but on the back of improved realisation and with the reduction in overall expenditure, the EBIDTA was substantially improved to Rs 240 crore as compared to Rs 150 crore in the previous year, an increase of 60%. On QoQ basis also the EBIDTA improved by 51%.

Cement prices which started improving from the month of April’20 sustained during the second quarter under review with only marginal aberrations in some of the southern states.  These improved prices along with the cash and carry policy of the company helped in improving the profitability and the liquidity in these troubled times, said N Srinivasan, vice chairman, India Cements.

The company has also taken pro-active steps in containing the fixed cost on contract labour, administrative and marketing overheads together with improvement in the operating parameters.  The overall volume of the company had come down by 21% during the second quarter and nearly by 38% for the half year ended September’30, 2020.

With the backdrop of decline in demand, the overall volume of clinker and cement was at 2.107 million tonnes as compared to 2.667 million tonnes in the same quarter of the previous year. The variable cost of production was reduced by 6% (by Rs.130/- per ton) while the outgo on fixed overheads was also significantly reduced.

With the improved selling prices, the net plant realisation (NPR) was up by 11% as compared with the previous year.

On the outlook, he said, a sluggish performance by the cement industry in the last  quarter of last year was further damaged by Covid-19 from March onwards.

The impact on the cement industry has not been consistent throughout India. While north, central and eastern India saw a substantial growth in demand which led to impressive performance by companies located in that region, western India was impacted by Covid-19 and Gujarat and Maharashtra bore the brunt of the pandemic, said Srinivasan.

"Now after a good monsoon and with people having learnt to cope with Covid-19 and with decreased pandemic activity, we see revival in western India also which can lead to improved demand in the two quarters to come," he said.

Company's capacity utilisation in the first quarter was at 35 per cent and it improved to 53 per cent in Q2. For the half of the fiscal it was 43 per cent.