On Profit Path: India Cements nets Rs 58 cr profit in Q1

CHENNAI: Boosted by an extraordinary income of Rs 241 crore, India Cements has turned black as it reported a consolidated net profit of Rs 58.47 crore in June 2024 quarter even though its sales volume declined 26 per cent as capacity utilisation was severely hit due to continuous liquidity crunch.

The extraordinary income came from the sale of its grinding unit in Parli, Maharashtra, during the quarter, a measure taken to improve its liquidity.

The capacity utilisation, for the N Srinivasan-led India Cements (ICL), was adversely affected due to free fall in cement prices resulting in a sub-optimal operating performance for the Q1 ended June 30, 2024.

The Chennai-based company, in which the promoters are selling their stake to rival Aditya Birla group firm UltraTech Cement (UCL), had reported a net loss of Rs 87.40 crore during the April-June quarter a year ago.

ICL’s revenue from operations was down 28.53 per cent to Rs 1,026.76 crore during the period under review as against Rs 1,436.74 crore in the corresponding quarter, as per a regulatory filing. While ICL’s capacity utilisation was severely impacted due to the continuous liquidity crunch on account of losses sustained in the earlier quarters, it failed to take advantage of the reduced fuel cost as operating margins further shrunk on account of low volume.

“The higher cost of production as compared to peers due to varying vintage of the plants together with free fall in cement prices affected the dispatch and the margins,” a release from the company said.

The cement and clinker volume for the quarter was 19.61 lakh tons as compared to 26.66 lakh tons in the same quarter of the previous year with a drop of more than 26 per cent. “The EBIDTA was accordingly negative at Rs 22 crore against a positive Rs 12 crore in last year. The interest and other charges were higher at Rs 82 crore against Rs 58 crore while depreciation was up at Rs 55 crore against Rs 53 crore and the resultant loss before extra-ordinary item was at Rs 160 crore against a loss of Rs 99 crore,” it said.

Total expenses of ICL in the June quarter were down 22.76 per cent to Rs 1,190.24 crore. ICL’s total income in the June quarter was down 27.81 per cent to Rs 1,042.27 crore.

The promoters and the members of the promoter group of the company entered into a share purchase agreement on July 28, 2024 with UCL to sell their stake of equity shares in the company at a price of Rs 390 per equity share subject to necessary regulatory approvals.

Incidentally, CARE has put the ratings assigned to the bank facilities of India Cements on ‘rating watch with positive implications’ following the acquisition news.