Faced with contraction in cement demand in its key markets, Birla Corporation Limited reported a 3.6% year-on-year decline in revenue in the December quarter. Revenue for the quarter dipped from Rs 1,823 crore a year earlier to Rs 1,757 crore, amid an estimated 6% decline in cement demand in the company’s key markets.
Sales by volume in the December quarter was at 3.35 million tons against 3.55 million tons a year earlier—a drop of 5.6%. This translated into a lower capacity utilisation of 86% for the December quarter against 92% a year earlier.
Even amid unfavorable market conditions which impacted all cement makers, Birla Corporation Limited was able to shore up realisation per ton by 3.4%, from Rs 4,739 in the year earlier to Rs 4,899 in the December quarter. It stands out as an achievement in the light of the decline in sales of premium and high-yielding blended cement during the quarter.
Profitability of Birla Corporation Limited’s Cement Division for the December quarter was seriously impacted by weak demand and a sharp rise in variable costs. Power and fuel cost per ton went up by 39% year-on-year and 20% sequentially. EBITDA per ton for the Cement Division was down 36% from the year earlier, from Rs 992 to Rs 638.
The Company has been taking steps across functions to mitigate the impact of rising commodity prices. These include significant scaling up of captive coal mining: Coal production during the December quarter rose 8% year-on-year. Transportation of fly ash in containers was increased at Maihar, the Company’s largest plant, to reduce costs. Cost of distribution was under huge pressure due to the spurt in the price of diesel. Effective measures were taken to rationalise distribution costs, thanks to which the cost of delivery in the December quarter rose only 3% over the year earlier.
Alongside, the Company continues to aggressively scale back consumption of fossil fuels. Share of renewables in total power consumption rose to 23% in the December quarter compared with 20% in the year earlier. For the nine-month period till December, share of renewables was at 22% against 19% in the year earlier.