Latest News | Birla Corp Posts 49 Pc Decline in Q2 Profit at Rs 85 Crore

New Delhi, Nov 10 (PTI) MP Birla group's cement firm Birla Corporation Ltd (BCL) on Wednesday reported a 49 per cent decline in consolidated net profit at Rs 85.55 crore in the September quarter, hit by operational headwinds in key markets and higher expenses, mainly due to coal shortage.

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The company had posted a consolidated net profit of Rs 166.62 crore in the same period of the last fiscal, BCL said in a regulatory filing.

Consolidated revenue from operations during the second quarter stood at Rs 1,697.84 crore as compared to Rs 1,654.25 crore in the year-ago period, it added.

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Total expense stood at Rs 1,591.92 crore as compared to Rs 1,439.35 crore in the year-ago quarter, the company said.

Profitability was impaired by severe operational headwinds in all key markets and a surge in expenses, it added.

"Demand for cement was majorly impacted by the extended and heavy monsoon and shortage of sand in states such as Uttar Pradesh (UP) and Bihar which are important markets for the company," BCL said.

Apart from the shortage of sand in UP and Bihar, the unusually heavy rainfall and flooding in some regions of these states and Maharashtra made the matter worse, it added.

To sustain a healthy market share and capacity utilisation, which was maintained at 84 per cent in the September quarter the company had to channel its products outside its core markets, which, in turn impacted realisations and profitability, it added.

The company further said it faced a sharp increase in fuel, raw material and packaging costs during the quarter owing to significant increase in commodity prices.

"Due to increase in fuel prices total distribution cost in the September quarter rose 5.4 per cent over the same period last year while sequentially, the company managed to reduce it marginally," it said adding effective cost control and efficiency improvement made the impact of cost escalation on the company's business lesser than the overall industry.

BCL further said,"Prices of pet coke and coal, both domestic and imported, went up sharply during the quarter. Linkage coal from subsidiaries of Coal India Ltd was also in short supply, forcing the company to buy coal from the open market at substantially higher prices."

In view of the significant increase in coal price, the company said it has decided to operate only one boiler at its captive power plants in Chanderia (Rajasthan) and Satna (Madhya Pradesh), respectively, and change power mix to reduce the impact of increase in power and fuel costs.

Also, in order to make itself more self-reliant, BCL said it has taken steps to significantly boost production of coal at its captive mine, Sial Ghogri (in Madhya Pradesh) in the second half of the financial year.

As a long term strategy, the company is expediting the development of two other captive coal mines, Bikram and Brahampuri (both in Madhya Pradesh), which were secured through auction in 2019, it added.

On the outlook, BCL said post monsoon, demand for cement has started to improve and it has raised prices to partially pass on the increase in input costs.

"Taking advantage of an improved demand scenario, geographical mix of sales is being optimised again. Together these measures are expected to improve net realisation in the second-half of the financial year," the company said.

On the jute division, BCL said it has been consistently improving its profitability and turned in its highest ever quarterly cash profit of Rs 18 crore in the second quarter as compared to Rs 8.3 crore in the same period last year.

However, it said availability of raw jute has dried up from October and "it is feared that the division may have to scale back production during the rest of the financial year" due to raw material shortage "as restrictions have been imposed on holding stocks of raw jute".

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)