Combination of cost control measures, ‘smart’ pricing, efficient production, has enabled India Cements to survive during the times of the global pandemic. Though the city-based company took a massive loss of 6-7 lakh tons of sales volume, translating to a hit to the tune of Rs 57-60 cr, the cement major foresees a revival of demand, especially in rural areas.
“In March alone we lost 6-7 lakh tons that meant a contribution dip to the extent of Rs 85 cr, pulling the profit for the quarter by 14%. After re-opening the plants on April 14, we only sold in small quantities (old stock of 1 lakh tons) but not started the kilns until mid-May,” N Srinivasan, VC-MD, India Cements, said on Wednesday.
Though the overall volume of clinker and cement saw a 11 pc drop this year to 110.22 lakh tons from 124.40 lakh tons last year, thereby a contribution loss of Rs 150 cr, he said the Q1 of the current year would be better based on the trends. “We introduced two essential changes,” he said, dwelling on its ‘cash and carry’ strategy, which provided liquidity after it re-opened in April and keeping the invoice pricing to the dealers intact.
It could reach a capacity utilisation of 71 pc for the year as against 79 pc in the previous year. The prices had gone up smartly, Srinivasan said, noting that while demand was limited by areas under lockdown – Chennai, Mumbai and Pune, rural demand was decent, with monsoons also playing its part. “We have mitigated the revenue loss by reducing the cost of production, maintaining consistent quality and additives level,” he added. The exceptional item of Rs 100 crore was used to make provisions to its subsidiary airline as advance. A portion of the amount was directed towards its infrastructure division and a vendor-related NCLAT settlement of Rs 18.75 cr. India Cements has met its long-term debt obligations by paying Rs 140 cr on schedule. Of the Rs 2,500 cr term debt, having availed the moratorium benefits, it is set to pay Rs 500 cr. “We have not re-structured our debt,” he said.
We will always make cement: N Srinivasan
On reports about RK Damani raising stakes in the company, Srinivasan said clarifications were given to SEBI. “There is nothing to say. Stability of management will be okay. He (Damani) is a respectable person, who has chosen to invest in India Cements. I should not say more. This company has been around for more than 70 years. We will continue to make cement.”