India Cements Q3 net declines 95% on volume loss, high variable costs : Rashtra News
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The performance of the company was severely affected by the record monsoon in the southern states with consequent flooding in several areas which resulted in stalling of the construction activities.
India Cements on Friday reported a 95% drop in its standalone net profit at Rs 3.30 crore for the third quarter of FY22 as compared to Rs 62.02 crore in the corresponding quarter of last fiscal, owing to reduced sales volumes on the back of heavy rains in southern markets and increased variable operating costs due to high fuel costs. The company’s revenue from operations dropped to Rs 1,108 crore from Rs 1,160 crore.
The performance of the company was severely affected by the record monsoon in the southern states with consequent flooding in several areas which resulted in stalling of the construction activities. This was further compounded by downward movement in selling prices in the east and north-east markets from where the company withdrew as the sales in those areas became un-remunerative.
This resulted in a lower volume for the quarter for the company which together with the onslaught of increased fuel prices had a telling impact on the bottom line for the quarter under review.
N Srinivasan, vice-chairman and MD, India Cements told mediapersons over a virtual press meet that these were the challenging times due to Omicron and southern states getting flooded during monsoon which resulted in stalling of the construction activities. “On top of this, for the first time we had coal crisis in the world. Australian coal was not available, American coal was high priced and Indonesian coal was erratic in availability. South African/Australian coal quality was lesser than American coal,” he said.
India Cements bought coal reasonably at $100/tonne, then at $135 and later on at $180/tonne. At the same time, coal price shot up from $60 to $280. The variable cost had gone up by nearly 25% due to substantial increase in fuel prices. The increase in variable cost alone meant a contribution loss of more than Rs 115 crore.
“Going forward, the demand for cement is good. We still have over 3 lakh tonne at a lower price. Therefore, with demand going up. what we have not done is to sell cement at low price with high cost coal unlike our peers,” he said.
India Cements had effected the last price hike in October. The coal prices have gone past that increase and further increase is necessary to combat further coal prices, he said.
The company could sell 21.08 lakh tonne in the third quarter as compared to 23.77 lakh tonne in the corresponding quarter previous year, recording a drop of 11%. The capacity utilisation of the company was around 54% as compared to 61% during the same quarter of the previous year. “ We will start our expansion projects only after we achieve full capacity utilisation,” he added.
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( News Source :Except for the headline, this story has not been edited by Rashtra News staff and is published from a www.financialexpress.com feed.)
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