- Despite good demand, the performance was severely dented due to a significant increase in input costs during last year: N Srinivasan, Vice-Chairman and Managing Director of India Cements
- India Cements will be selling about 74 acres of land at villages Kantakapalle and Chinnipalem, Mandal Kothavalasa, District Vizianagram, Andhra Pradesh, to Ultratech for ₹70 crore
- Last year, sales were up as the company benefited from being a sponsor of CSK and the good performance of the team.
- The company reported a positive EBIDTA in the first quarter of this fiscal, after posting negative EBIDTA for three consecutive quarters
NE BUSINESS BUREAU
CHENNAI, SEPT 22
India Cements has initiated necessary actions to reduce the variable costs by modernising its factories and improve the liquidity position through the sale of some portion of its lands.
Speaking at the company’s 77th annual general meeting on Thursday, N Srinivasan, Vice-Chairman and Managing Director of India Cements, said, “Despite good demand, the performance was severely dented due to a significant increase in input costs during last year. The setback in performance was also due to other factors like its operating of old plants, supply overhang, severe competition and subdued price realisation. To offset this, the company is seriously pursuing its plan to monetise some of the non-core assets for improving liquidity and operating performance as well as meeting some of the minimum capital expenditure.”
The company has now taken up programmes to address the rise in costs by refurbishing its units. It has now engaged global consulting firm Boston Consulting Group to study the operations at three of its plants in Andhra Pradesh and Telangana, and recommend measures to improve efficiency in their operations.
The company has 8 cement factories spread across Tamil Nadu, Andhra Pradesh, Telangana, Rajasthan, and Maharashtra.
It has already engaged FLSmith and ThyssenKrupp Industries to undertake a detailed study on the operating parameters of some of its other units for refurbishment/modernisation to bring them on par with that of state-of-the-art modern cement factories.
The new cement mill, replacing the old cement mill, at Sankar Nagar is expected to be commissioned during this quarter. Also, the waste heat recovery system at Chilamkur in Andhra Pradesh is expected to be completed in the current year. These projects are expected to help cut variable costs going forward.
According to him, India Cements was the first one to set up a waste heat recovery plant in the cement industry in 2004 at Vishnupuram, now part of Telangana. It is also exploring opportunities for producing green energy from solar power and for using alternative fuels. On the marketing front, he said the company is focused on increasing retail sales. Last year, sales were up as the company benefited from being a sponsor of CSK and the good performance of the team.
Selling land in Andhra Pradesh to Ultratech
Meanwhile, India Cements will be selling about 74 acres of land at villages Kantakapalle and Chinnipalem, Mandal Kothavalasa, District Vizianagram, Andhra Pradesh, to Ultratech for ₹70 crore (excluding taxes, stamp duty and registration charges). It has been planning to raise funds to meet working capital, repayment of some debt, and Capex in the near term.
“We are focused on lifting the fortunes of our core business, cement. The Company has copious limestone deposits and has a wealth of experience in cement manufacturing. Though cyclical in nature, the industry has immense potential for growth,” said Srinivasan.
In Q1FY24, India Cements reported a standalone loss of ₹75.27 crore compared to ₹76.09 crore net profit a year ago, owing to reduction in selling price and loss of volume. However, the company could narrow the losses sequentially where it had recorded losses to the tune of ₹218 crore in the quarter ended March of FY23.
The company reported a positive EBIDTA in the first quarter of this fiscal, after posting negative EBIDTA for three consecutive quarters.
