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Birla Corporation skids after Q4 FY22 PAT drops 53% YoY to Rs 139 cr

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Birla Corporation declined 3.98% to Rs 922.30 after the company reported 53.4% decrease in consolidated net profit to Rs 138.96 crore in Q4 FY22 as against Rs 298.38 crore in Q4 FY21.

Net sales was at Rs 2,264.21 crore for the quarter ended 31 March 2022 as against Rs 2,132.61 crore during the same period in the previous year, registering a growth of 6.2% Y-o-Y (year-on-year).

Profit before tax stood at Rs 153.18 crore in the fourth quarter, falling 14.8% from Rs 179.78 crore during the period under review. Profitability was dented after the company reported a 12.7% spike in total expenditure to Rs 2,025.95 crore in Q4 FY22 over Q4 FY21.

 

The cement divisions, sales (by volume) up 1.68% to 4.24 million tonnes (MT) in Q4 FY22 as against 4.17 million tonnes (MT) in Q4 FY21. Capacity utilisation stood stagnant at 108% during both Q4 FY22 as well as Q4 FY21. EBITDA fell 14.67% to Rs 346.03 crore in Q4 FY22 from Rs 405.53 crore in Q4 FY21. EBITDA per ton slipped 30.53% to Rs 650 in Q4 March 2022 as compared to Rs 937 in Q4 March 2021.

Realization per tonne grew 4.32% to Rs 5,042 in Q4 FY22 as compared to Rs 4,833 in Q4 FY21. Cash profit lost 13.86% to Rs 291.30 crore in Q4 March 2022 as against Rs 338.16 crore in Q4 March 2021.

The company's consolidated net profit drop 38% to Rs 421.89 crore on 10% increase in net sales to Rs 7,461.22 crore in FY22 over FY21. In FY22, the cement maker achieved its highest ever cement sales by volume, overcoming unprecedented challenges such as cost pressure, sluggish demand and disruptions owing to the COVID-19 pandemic.

Sales in the three months till 31 March were the highest ever for a quarter. For the full year, sales stood at 14.22 MT, representing a growth of 6.2% over the previous year. The previous highest of 13.65 MT was achieved prior to the pandemic in FY 2018-19. The spurt in sales came mostly towards the end of the financial year. Birla Corporation's capacity utilization for FY 2021-22 was one of the best in the industry at 92% against 85% in the previous year. This translated into a revenue growth of 9.8% for the full year and 8.7% for the March quarter, but then, profitability came under immense pressure because of the extremely high fuel costs which could not be passed on to consumers.

Furthermore, market conditions were not conducive for price hike until at the end of the financial year, and it is estimated by rating agency Crisil that margins for the cement industry contracted by 400-500 basis points in FY 2021-22.

Birla Corporation said that, despite healthy growth in sales by volume in almost every segment and market, its profitability was hugely impaired by at least 40% increase in fuel cost and 8% increase in cost of delivery. Freight costs continued to rise through the year as diesel prices were revised in tandem with rising crude prices. To rationalize cost of delivery, the company worked towards reducing the lead distance for each production unit and dependence on road transport.

During FY 2021-22, Birla Corporation's subsidiary RCCPL commissioned its 3.9 mt cement plant at Mukutban in eastern Maharashtra. This new unit has boosted Birla Corporation's consolidated annual production capacity to almost 20 MT. Despatch of cement has started from the Mukutban plant and it is expected that the plant's operating parameters will reach optimum levels by the end of the current financial year, pending further ramp-up.

Meanwhile, the board of directors of the company declared an interim dividend of Rs 10 per share for the year ended 31 March 2022. The board has also approved issue of secured redeemable non-convertible debentures (NCDs) aggregating upto Rs 200 crore on private placement basis in one or more tranches, within the overall borrowing limits of the company.

For its outlook, as per Crisil, "the cement demand in India is expected to remain stable and grow at 5%-7% in the current financial year if capital expenditure by State and Union Governments isn't scaled back. But uncertainties abound as the government grapples with inflation. Cement companies have recently been able to raise prices to partially mitigate the cost pressure. But it isn't immediately clear if the price hike would sustain in the face of inflationary pressure and slow recovery in private consumption. On the other hand, cost pressure for cement companies is unlikely to ease in the foreseeable future and profitability is going to remain under pressure."

Birla Corporation, the flagship Company of the MP Birla Group, has interests in cement and jute.

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First Published: May 12 2022 | 12:55 PM IST

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