Pandemic a temporary blip as India Cements Q4 profit soars to Rs 213 cr

Announcing the results to the media here on Monday, N Srinivasan, VC and MD, said the company had also managed to repay a debt of Rs 550 crore last year. “This is commendable since we were not operating at full capacity,” he sought to point out. Srinivasan was reappointed as MD for a further period of five years with effect from May 26, 2021, as per a stock exchange notification. 

Reduced inventory, cash management measures had helped India Cements to generate more money and hold on to the prices with the year seeing better volumes also.  “We managed our fixed costs well and the effort will continue,” Srinivasan said, noting that this included a one-time staff cost and since the use of contract labour was more in the last quarter to meet production and volume needs. 

Incidentally, the company saw the offtake of cement surging in the east, with 4.5 lakh tons while 3 lakh tons got absorbed during the last quarter. Of the 29 lakh tons clinker supplied during last year, Q4 saw a supply of 6.5 lakh tons. It achieved a total volume of clinker and cement of 89.02 lakh tons (110.22 lakh tons). The company’s turnover was Rs 4,460 cr in March 31, 2021 as compared Rs 5,085 crore for the previous year. 

Amid soaring freight costs, India Cements held stocked oil worth Rs 150 crore and though a hit of Rs 90 crore owing to the stock had skewed the numbers a bit, in absolute terms, the company’s performance was good, he said, adding the net plant realisation (NPR) of Rs 400 (up 12 per cent) for the year ended 31, March 2021, was more than the previous year. 

Since the retail outlets are closed, the company, which is in its 75th year, is prudent on not wanting to build up inventory, which is the reason for its NPR in Q4 shooting to Rs 3,683 per ton this year from Rs 3,166 of last year. While variable costs have been contained, the company expects the prices to go up in June too by Rs 10 to Rs 15 a bag if input costs rise. In the current month, the price per bag has risen to Rs 10 on account of the input costs. To a query, Srinivasan said, the total debt at the beginning of last year was Rs 3500 crore while the settlement of term debt, working capital and interest free sales tax loan had left this figure to be Rs 2900 core-odd at the end of the FY. 

Srinivasan believes the lifting of lockdown in west and north followed by a gradual lift-off in south by mid-June augurs well for the company. “We don’t see any need to change our business plans for the year,” he said, adding the capex plans were on course for the cement mill at the Sankara Nagar plant and the wastage heat recovery unit at Chilamkur. The decision to go ahead with project in north will be based on cash flow situation. India Cements’ strategy to deploy cash and carry has paid off as Srinivasan said “price is important and we see every quarter our capacity utilisation going up. The pent up demand will be pronounced once there is a substantial lifting off of the lockdown mid-June.” 

“COVID reflected an artificial reduction of demand due to the restrictions. During the pre-COVID period, we saw demand flying in all the states and in fact, east witnessed shortage of cement. With an expansionist Budget, a short interruption in the form of the pandemic and the thrust on infrastructure, we do not foresee a problem,” he signed off.