Kesoram working on a two-pronged strategy to return to black in 18 months

Kesoram Industries, a B K Birla group company, is working on a two-pronged strategy to return to profitability in the next 18 months.

The two key elements for strengthening the balance sheet are scaling up blended cement and refinancing debt, P Radhakrishnan, whole-time director and chief executive officer (CEO) of Kesoram said during an interaction after the company’s annual general meeting on Wednesday. 

 In FY23, Kesoram posted a net loss of Rs 115.67 crore on a standalone basis. Total income stood at Rs 3,603.93 crore. In FY22, net loss was at Rs 130.01 crore.

The company achieved sales volume of more than 7 million tonnes (mt) in FY23. The share of blended cement sales was at 54 per cent. This year, the plan was to increase the share of blended cement to 60 per cent and eventually take it to 80 per cent, Radhakrishnan said.

EBITDA for FY23 was at Rs 371.22 crore but the finance cost was higher at Rs 422.78 crore. Kesoram’s total debt was around Rs 1,700 crore.

Radhakrishnan said that the focus would be to improve operations, which would lead to lower interest rates. And to improve operations, the company would have to move to higher margins.

In line with the trend in the industry, the company’s performance was impacted by the rise in input cost, especially fuel prices, which could not be fully passed on to customers.

Kesoram is aiming at volumes of 8 mt this year. “It’s important to invest all your energy into operation and demonstrate, everything else will follow automatically,” Radhakrishnan said.

On debt, he said that the first milestone would be to bring it down to Rs 1,200 crore. A stronger balance sheet would help the company attract capital at lower cost, Radhakrishnan said.

The company also has growth plans for the medium term. In the next five years, Kesoram is eyeing a capacity of 15 mt, up from the current 10 mt.

The company’s manufacturing units at Sedam (Karnataka) and Basantnagar (Telangana) are located near limestone deposits.

Radhakrishnan said that it would make more sense to go for brownfield expansion than greenfield.