India Cements upbeat after vax drives, easing of lockdown

“Economic activity will not be hurt and there has been substantial vaccination cover,” N Srinivasan, MD and Vice-Chairman said, noting that while the lockdown phase impacted demand of cement, it had eased considerably with the lifting of restrictions.

Expecting the cement demand to revive, he said the remaining eight months augured well for the industry. Spiralling petrol and fuel costs and lower capacity utilisation had hit the company though the north regions had outperformed south, where there is a capacity overhang.

“Freight costs have eaten into our earnings, but there is no price drop,” he said, adding the net plant realisation was Rs 3,942 per tonne this quarter compared to that of last year at Rs 4,235.

The capacity utilisation had also gone up 50 per cent compared to 30 per cent last year.

While operationally there was no problem, Q1 demand in Kerala as practically non-existent. But as states continue to ease restrictions, the company expects the demand pick up with a caveat on Kerala.

“Can’t go by day to day index of infections,” was his response to a query on the third wave creating uncertainty around.

The company has 8 million tonne of cement yet to be released into the market and its investment in Madhya Pradesh would be evaluated as per unfolding scenario.

Srinivasan also said the main costs – people and energy would continue to be the key focus areas as the company reduces its fixed costs through training and multi-skilling besides reducing number of people for producing a tonne of cement.

“We are working on it all times. We have made lot of strides in reducing people,” he said, adding 722 non-managerial grade staff and 1,600 contract labour comprised the total workforce strength.

The company had posted a net profit of Rs 19.74 crore during the April-June period of the previous fiscal, India Cements said in a regulatory filing.

Its revenue from operations rose 36.90 per cent to Rs 1,045.25 crore as against Rs 763.46 crore earlier. Total expenses stood at Rs 983.11 crore, up 32.30 per cent from Rs 743.04 crore in Q1 FY21.

Its cement production improved during the quarter by nearly 40% and the overall sales including clinker was up by 37% as compared to previous year.