Instead of volume, the company has been focusing on the business side, by taking a three-pronged approach. “We felt, there is no need to have muted prices. We have increased our prices and others have followed,” India Cements VC-MD N Srinivasan said, touching upon price parallelism.
The ‘cash and carry’ method instead of credit has also worked well for the cement major. Industry too had adopted the same practice, he said, adding “my invoice price is the only price and there is no wholesale price.”
Such a move has helped it on the liquidity front. It has also taken advantage of the first moratorium that allowed the company to “breathe much more easy than earlier,” Srinivasan said.
Pruning costs on the marketing side and attending to fixed costs had already yielded savings of Rs 130 cr per quarter. Also rationalising the payment to channel partners had been favourable. “July volume has been better than April and May. Even the variable cost has come down. Against Rs 2279 cr last year, it was around Rs 2130 cr to Rs 2140 cr. The aim is to bring it down to Rs 2,100 crore,” he said.
Srinivasan said the silver lining was the governmentbacked projects in Andhra, where the demand had suddenly dropped last year. But with emphasis on housing for weaker sections and schools, the loss could be recouped, he said, adding the company is on a “sounder footing” on a cost basis.
Net plant realisation is expected to go up Rs 500 to Rs 600 on a year-on-year basis. For the January to June period, it had gone up to Rs 1000. Unfinished projects, pent up demand were all instrumental in India Cements managing to be on a firmer ground.
Its net profit was Rs 64.27 crore during the April-June quarter of the previous fiscal while its revenue from operations was down 48.97 per cent to Rs 763.46 crore during the quarter under review as against Rs 1,496.37 crore in the corresponding period of the previous fiscal.