Informist, Wednesday, Nov 9, 2022
By Avishek Rakshit
KOLKATA – Mounting costs and an inability to sustain price hikes resulted in Birla Corporation Ltd posting a consolidated net loss of 564.6 mln rupees for the quarter ended September.
This is the first time in the past several years that the company, which changed hands from the Birla family to Lodha family two decades ago, has posted a quarterly loss.
In the year-ago period, which also saw cost pressures but not at critically high levels, the company had posted a net profit of 855.5 mln rupees.
The sharp increase in costs during Jul-Sep could be attributed to a jump in energy costs. Costs related to coal and petcoke jumped 74% on the year, while power costs went up by 14%.
During Jul-Sep, the overall cost of cement production went up by 20% on the year and 5% sequentially.
Relatively higher interest and depreciation costs on account of the recently-commissioned Mukutban unit, which was set up at an investment of 27.4 bln rupees in Maharashtra, also chipped away at the bottomline.
For Jul-Sep, depreciation and amortisation costs went up by 27.8% on the year to 1.3 bln rupees.
The completion of the Mukutban unit also increased the company's debts to 41.7 bln rupees as of Sep 30 from 33.5 bln rupees a year ago.
On the other hand, the company rolled back price hikes in some of its key markets such as Madhya Pradesh, Rajasthan, Maharashtra and Gujarat to hold on to its market share.
The strategy proved useful as the company increased its sales volume by 11% on the year to 3.6 mln tn. Previous price hikes, even adjusted against the recent rollback, had led to 5.6% improvement in realisation per tonne of sales.
These factors together led to a revenue growth of 17.8% to nearly 20 bln rupees for Jul-Sep.
However, the total costs rocketed 33.4% to 21.2 bln rupees, undoing the benefits of higher volumes and prices.
As a result, earnings before interest, tax, depreciation and amortisation per tonne of sales declined 69.3% on the year to 232 rupees. At a consolidated level, the company's EBITDA for the September quarter fell 51.6% on the year to 1.4 bln rupees, much lower than what most sector analysts had estimated.
While predicting the financials of Birla Corp, sector analysts had been widely divided in their projections. Brokerages such as Axis Securities, Edelweiss Securities, Elara Capital and Yes Securities had elicited confidence in Birla Corp's ability to mitigate cost pressures and post a net profit. On the other hand, brokerages such as Nirmal Bang Equities, Motilal Oswal Securities, and Jeffries Group had predicted losses.
Even after reporting weak financials for the second quarter, Birla Corp remains optimistic about the future.
The company, which once benefitted largely from its petcoke inventory, is now increasing its focus on indigenous fuel sources to mitigate uncertain cost pressures on this front in the future.
Last month, the company acquired a new coal mine--Marki Barka in Madhya Pradesh--through auctions. The mine, which has high-quality coal with a geological reserve of 70 mln tn, has a peak rated production capacity of 1 mln tn a year. The mine will become operational by 2026.
Further, the Bikram coal block in Madhya Pradesh, which has a peak rated production capacity of 360,000 tn per year, is expected to start production next year.
These mines, once they become operational, are expected to reduce the company's dependence on coal and petcoke imports.
The company is increasing production from its Sial Ghogri coal mine in Madhya Pradesh as well, which touched a new high of 89,600 tn in the September quarter.
The company is also optimistic about the Mukutban project, which can add to its premiumisation drive. The plant can produce premium cement, which can yield better margins.
Further, the company has decided to bring back former chief operating officer Sandip Ghose as the new managing director and chief executive officer. Ghose will take charge from Jan 1, 2023.
Arvind Pathak, the current managing director and chief executive officer, has already tendered his resignation, but will continue to hold office till the end of the current calendar year.
At 1344 IST, shares of Birla Corp traded 5.5% lower at 951.0 rupees on the National Stock Exchange.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Namrata Rao
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
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Informist, Wednesday, Nov 9, 2022
By Avishek Rakshit
KOLKATA – Mounting costs and an inability to sustain price hikes resulted in Birla Corporation Ltd posting a consolidated net loss of 564.6 mln rupees for the quarter ended September.
This is the first time in the past several years that the company, which changed hands from the Birla family to Lodha family two decades ago, has posted a quarterly loss.
In the year-ago period, which also saw cost pressures but not at critically high levels, the company had posted a net profit of 855.5 mln rupees.
The sharp increase in costs during Jul-Sep could be attributed to a jump in energy costs. Costs related to coal and petcoke jumped 74% on the year, while power costs went up by 14%.
During Jul-Sep, the overall cost of cement production went up by 20% on the year and 5% sequentially.
Relatively higher interest and depreciation costs on account of the recently-commissioned Mukutban unit, which was set up at an investment of 27.4 bln rupees in Maharashtra, also chipped away at the bottomline.
For Jul-Sep, depreciation and amortisation costs went up by 27.8% on the year to 1.3 bln rupees.
The completion of the Mukutban unit also increased the company's debts to 41.7 bln rupees as of Sep 30 from 33.5 bln rupees a year ago.
On the other hand, the company rolled back price hikes in some of its key markets such as Madhya Pradesh, Rajasthan, Maharashtra and Gujarat to hold on to its market share.
The strategy proved useful as the company increased its sales volume by 11% on the year to 3.6 mln tn. Previous price hikes, even adjusted against the recent rollback, had led to 5.6% improvement in realisation per tonne of sales.
These factors together led to a revenue growth of 17.8% to nearly 20 bln rupees for Jul-Sep.
However, the total costs rocketed 33.4% to 21.2 bln rupees, undoing the benefits of higher volumes and prices.
As a result, earnings before interest, tax, depreciation and amortisation per tonne of sales declined 69.3% on the year to 232 rupees. At a consolidated level, the company's EBITDA for the September quarter fell 51.6% on the year to 1.4 bln rupees, much lower than what most sector analysts had estimated.
While predicting the financials of Birla Corp, sector analysts had been widely divided in their projections. Brokerages such as Axis Securities, Edelweiss Securities, Elara Capital and Yes Securities had elicited confidence in Birla Corp's ability to mitigate cost pressures and post a net profit. On the other hand, brokerages such as Nirmal Bang Equities, Motilal Oswal Securities, and Jeffries Group had predicted losses.
Even after reporting weak financials for the second quarter, Birla Corp remains optimistic about the future.
The company, which once benefitted largely from its petcoke inventory, is now increasing its focus on indigenous fuel sources to mitigate uncertain cost pressures on this front in the future.
Last month, the company acquired a new coal mine--Marki Barka in Madhya Pradesh--through auctions. The mine, which has high-quality coal with a geological reserve of 70 mln tn, has a peak rated production capacity of 1 mln tn a year. The mine will become operational by 2026.
Further, the Bikram coal block in Madhya Pradesh, which has a peak rated production capacity of 360,000 tn per year, is expected to start production next year.
These mines, once they become operational, are expected to reduce the company's dependence on coal and petcoke imports.
The company is increasing production from its Sial Ghogri coal mine in Madhya Pradesh as well, which touched a new high of 89,600 tn in the September quarter.
The company is also optimistic about the Mukutban project, which can add to its premiumisation drive. The plant can produce premium cement, which can yield better margins.
Further, the company has decided to bring back former chief operating officer Sandip Ghose as the new managing director and chief executive officer. Ghose will take charge from Jan 1, 2023.
Arvind Pathak, the current managing director and chief executive officer, has already tendered his resignation, but will continue to hold office till the end of the current calendar year.
At 1344 IST, shares of Birla Corp traded 5.5% lower at 951.0 rupees on the National Stock Exchange.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Namrata Rao
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2022. All rights reserved.
