Birla Corporation Ltd reported 55 per cent drop in consolidated net profit at ₹111 crore for the quarter ended March 31, 2022, compared to ₹249 crore in the same period last year. Profitability came under immense pressure due to extremely high fuel costs which could not be passed on to consumers.

Consolidated revenue from operations grew six per cent to ₹2,264 crore (₹2,133 crore).

For the year ended March 31, 2022, net profit declined by nearly 37 per cent to ₹399 crore, compared to ₹630 crore in FY21. Revenue from operations was up 10 per cent at ₹7,461 crore (₹6,785 crore).

Sales numbers

Sales for the full year grew by nearly six per cent to 14.22 million tonnes (mt) over previous year. The previous highest of 13.65 mt was achieved prior to the pandemic in FY19. The spurt in sales came mostly towards the end of the financial year. March quarter sales at 4.24 mt were up 27 per cent sequentially and nearly two per cent year-on-year.

The company’s capacity utilisation for FY22 was at 92 per cent, against 85 per cent in the previous year.

Though Birla Corporation managed to raise its full-year realisation from cement sales to ₹4,938 per tonne, up 2.2 per cent over ₹4,829 in the previous year, it wasn’t enough to mitigate the cost pressure, the company said in a press statement. The company’s EBITDA for the full year at ₹1,209 crore was 16 per cent lower than the previous year. EBITDA per tonne for FY-22 declined 25 per cent year-on-year to ₹755 a tonne.

“Market conditions were not conducive for price hike until at the end of the financial year, and it is estimated by rating agency Crisil that margins for the cement industry contracted by 400-500 basis points in FY2021-22,” the company said in a press statement.

Despite healthy growth in sales by volume in almost every segment and market, the company’s profitability was hugely impaired by at least 40 per cent increase in fuel cost and 8 per cent increase in cost of delivery. Freight costs continued to rise through the year as diesel prices were revised in tandem with rising crude prices.

“Despite achieving the highest ever production at three of our units—Satna, Maihar and Chanderia—and record sales in five states, our profitability took a hit because of excessive rise in fuel and freight costs, which could not be passed on to consumers,” Harsh V. Lodha, Chairman, MP Birla Group said in the statement. “The tide has, however, started to turn from March, and we are hopeful that in the current financial year, our company will reach new heights. The Mukutban unit which has commenced production at the end of April will add a lot of heft to our cement business in the near future,” he added.