Thursday, May 23, 2024

Birla Corporation June quarter revenue up 25%

Birla Corporation Limited has in the quarter ended 30 June registered a 25.2% increase in revenue even amid tepid cement demand as the Company managed to ramp up capacity utilization (on a like-for-like basis) to 101%.

The Company’s consolidated revenue for the first quarter of FY22-23 was Rs 2,218.06 croreagainst Rs 1,758.41 crore in the same period last year. Sales in the first quarter of FY21-22 were disrupted by Covid-related outages and are not strictly comparable with the quarter under review.

Profitability, however, was dented by escalating power, fuel and freight costs. Costs of optimizing Birla Corporation subsidiary RCCPL Private Limited’s newly commissioned Mukutban plant in eastern Maharashtra also had a majorimpact on overall profitability,broadly in line with the management’s internal projections.

(Only figures excluding Mukutban are comparable with those of last year.)

Mukutban: Commercial production at Mukutban started on 30 April 2022 and the management has drawn up a detailed plan to ramp up production over the next few quarters. It is expected that the Mukutban plant will breakeven at EBITDA level by the end of the current financial year.

The stateoftheart integrated plant will, at peak capacity, produce 3.9 million tons of cement a year, and scale up the Company’s total production capacity to almost 20 million tons, an increase of more than 20% over earlier capacity.

As regards tax incentives, the total entitlement is based on the capital expenditure incurred for the Mukutban project. The incentive will be granted by way of 100% reimbursement of SGST, electricity duty and royalty on limestone paid by the unit. Incentive on account of SGST reimbursement will start to accrue after exhaustion of the input tax credit on capital expenditure from FY23-24. It will significantly boost the Company’s profitability.

Profitability: All units combined, the Cement Division’s EBITDA per ton plunged 35.5% to Rs 645. However, if adjusted for the start-up costs of Mukutban, the Division’s profitability for the June quarter, expressed as EBITDA per ton, remained more or less unchanged at Rs 751, compared toRs 755 for the full financial year ended 31 March, despite intensifying cost pressure.

Consolidated EBITDA for the June quarter at Rs 273.61 crore was down 22.5% year-on-year, while cash profit fell 29.6% to Rs 203.32 crore. Excluding Mukutban, EBITDA and cash profit for the June quarter would have come to Rs 312.19 crore and Rs 256.58 crore, respectively, both down a little over 11%.

Though the Company managed to improve realization from cement sales for the June quarter by 7.7% over the same period last year to Rs 5,311 per ton, it wasn’t enough to offset the 79% year-on-year increase in fuel costs. On a sequential basis, fuel costs have gone up by 21% in the June quarter. Combined with an across-the-board increase in commodity prices, overall cost for the June quarter went up by 19% over last year to Rs 734 per ton.

Challenges from rising fuel prices were aggravated by disruptions in supply of linkage and e-auction coal from Coal India Limited, which forced the Company to procure coal from open market at much higher prices. Given the fact that large quantities of linkage and e-auction coal were used in the comparable period of last year, the relative increase in coal cost in the June quarter of FY22-23 was higher.

Further, due to poor availability of linkage coal, cost of generation of captive power shot up at the Company’s Satna and Chanderia plants. Even as consumption of captive power was scaled back to the extent possible, power cost for the June quarter rose to Rs 433 per ton of production from Rs 372 last year.

Recent Articles

Related Stories

Leave A Reply

Please enter your comment!
Please enter your name here

Stay on op - Ge the daily news in your inbox