India Cements profit dips to Rs 21.97 cr in Q2

Total revenue was Rs 1193.35 cr compared to Rs 1075.45 cr. It reported a net profit of Rs 59.39 crore during the first half ended September 30, 2021 against Rs 88.39 crore in the same quarter a year ago. Total income came to Rs 2218.89 crore (Rs 1835.77 crore). The capacity utilisation during the Q2 ending September 30, 2021 improved to 61 pc from 54 pc during the same quarter last year.

While the pandemic and incessant rains have dragged the company’s sales down, the cement major’s VC-MD N Srinivasan sought to point out the “stupendous cost increase” on account of the surge in price of coal. It has gone up from “$70 to 80 per tonne to $105 to $135 in the last purchase. Now, it is at $250,” he said, adding it seemed prudent to have a three to four-month stock of coal that translates to 27 lakh tonnes of clinker production.

The lead time is between two and two-quarter months, for transporting from America to India, where the quality of coal is better but priced higher, he sought to point out, seeking to highlight that refineries were yet to open in America and the availability of pet coke was not good, apart from the fact state-owned collieries gave priority to power plants. If coal cost continues to soar, cement prices were bound to rise, Srinivasan cautioned.

The dip in profit has to be seen in the backdrop of COVID-19, strict lockdowns in stronghold markets such as Karnataka, Kerala and Tamil Nadu. In addition, the unprecedented rains in Kerala, which generally tends to cease after Onam, continued, thereby impacting the company’s performance, Srinivasan pointed out.

India Cements chose to target newer markets and regions, where the demand existed as they did not get severely hit by rain or pandemic. Given the accelerated pace of vaccination across the country, the company expects demand to pick up once the pandemic stage settles down.

Srinivasan also said the NPR or net plant realisation, had dropped by 175 per tonne this quarter against the same quarter, a year ago and Rs 211 per tonne on a sequential basis. The cost increase per tonne was Rs 325 year on year and Rs 108 per tonne sequentially.

While cement price remained steady, the NPR dropped due to high transportation cost incurred in selling in other markets and selling more OPC (ordinary Portland cement) than PPC (Portland Pozzolana Cement), he said, adding those having coal stock were likely to see a “more steady production in the coming months.”