Harsha Jethmalani
India Cements’ management remains cautiously optimistic about the future in the backdrop of risk of cost pressure from the increase in fuel prices and logistics cost together with the continued threat of the third wave of pandemic
India Cements Ltd reported weak earnings performance in the December quarter. A double whammy of lower sales and higher costs weighed on its results.
Reacting to the earnings, shares of the company fell 3.5% intraday on the NSE on Friday.
The company said that its performance during the quarter was severely impacted by the record monsoon in the southern states. Consequent flooding in several areas led to stalling of the construction activities in many regions. This was further compounded by downward movement in selling prices in the east and northeast markets from where the company withdrew as the sales in those areas became un-remunerative, the company said in a press release.
As a result, sales volumes in Q3FY22 fell 11% year-on-year (y-o-y) to 21.08 lakh tonne from 23.77 lakh tonne in Q3FY21. The company said that its key markets of Maharashtra, Kerala, Tamil Nadu and Karnataka saw a slower recovery in economic activities due to the aftermath of the pandemic. Consequently, capacity utilization was around 54% as compared to 61% during the same quarter of the previous year.
Further, higher operating costs continued to weigh on the company’s operating performance. While the net plant realization for the quarter was marginally higher by 5%, the variable cost of operation had gone up by nearly 25% y-o-y, due to substantial increase in the price of fuel. Its Ebitda in Q3FY22 stood at Rs110 crore compared to Rs218 crore in the same quarter last year. Ebitda is short for earnings before interest tax depreciation and amortization.
To be sure, elevated input costs has been a problem for the entire cement industry. While cement companies across India have tried to pass-on the burden of increased operating costs via price hikes in the December quarter, in many regions prices had to be rolled-back due to weak demand.
Meanwhile, the India Cements’ management remains cautiously optimistic about the future in the backdrop of risk of cost pressure from the increase in fuel prices and logistics cost together with the continued threat of the third wave of pandemic.
Source:livemint.com
