South India’s leading cement manufacturer, India Cements, slipped into the red in the January-March 2022 quarter as higher costs and headwinds (heavy rains and poor-selling prices) in its key business regions in the south battered its performance. It reported a snet loss of ₹24 crore against a net profit of ₹72 crore in the year-ago period.
The company is planning to hike prices in the next couple of months to offset an unprecedented increase in material and other costs. Besides, the cement major is also planning to monetise some of its land for repayments
“We will increase the price by ₹20 per bag on June 1 and another ₹15 per bag on June 15. There will be another increase of ₹20 on July 1, “N Srinivasan, Vice Chairman and Managing Director of India Cements, said after announcing the results.
“All costs have gone up for us. The proposed increase should cover the cost increases. If we don’t increase the prices, India Cements will incur huge losses. We are unable to sell below our costs,” he added.
More than two dozen cement brands are available in the Chennai market and the prices are in the range of ₹320-400 per bag depending on the quality.
The company’s variable costs went up by 33 per cent in the March 2022 quarter. The increase in variable costs could not be passed on to the consumer due to tough market conditions. The increase in unrecovered variable cost alone resulted in a loss of about ₹135 crore, leading to a reduction in EBIDTA.
The EBIDTA for the reporting period stood at ₹66 crore as compared to ₹212 crore in the year-ago period.
The company’s revenue was lower at ₹1,392 crore as against ₹1,450 crore on the back of an 11 per cent fall in overall volume at 26.57 lakh tonnes.
Srinivasan also said the company was planning to monetise some of its lands for repayments and also to make some improvements to the plants to reduce the costs substantially.
As of March 31, 2022, the company had an outstanding debt of ₹3,000 crore and it is planning to repay ₹500 crore in the current financial year.
“We are not in distress to sell. In order to ensure my liquidity is good and all my programmes get completed, we have decided to sell a small portion. We have appointed a group of senior people in our office for this exercise, “he added.
For the year ending March 31, 2022, the company’s EBIDTA was ₹478 crore, a drop of 42 per cent as compared to ₹829 crore in FY21. Its net profit had steeply declined to ₹39 crore in FY22 as compared to ₹222 crore in FY21. Its revenue stood at ₹4,713 crore in the previous financial year against ₹4,437 crore in FY21.
The board has declared a dividend of ₹1 per equity share of ₹10 for 2021-22.