India Cements Ltd today reported a turnaround in its third quarter results, posting a cash profit of Rs 6 crore compared to losses in the same period last year. This was achieved on the back of better cement pricing and lower production costs despite a 9% drop in sales volume.
For the October-December 2023 quarter, India Cements recorded positive EBITDA (earnings before interest, taxes, depreciation and amortization) of Rs 66 crore, a complete reversal from negative EBITDA of Rs 66 crore in the same period last fiscal. Revenue details were not provided in the company’s press statement.
The improved performance comes amidst a 4% degrowth in overall cement demand in November 2023 as per government data, although demand was higher by 10% in the cumulative April-November period this fiscal over last year.
India Cements said its capacity utilization dropped to 51% in the latest quarter from 56% a year ago due to stressed working capital conditions. Its total cement and clinker production declined by 9% on-year to 1.985 million tonnes. The volume drop was attributed to the company’s focus on preserving cash flows.
Despite lower volumes, India Cements managed to cut production costs through lower power usage enabled by larger share of alternate fuels in the fuel mix. Quarterly fuel cost per unit of energy fell to under Rs 2 per kcal from Rs 2.95 per kcal last year. This, coupled with better realizations, boosted profitability.
For the nine months till December 2023, India Cements’ clinker output was lower at 5.03 million tonnes compared to 5.36 million tonnes last year. Total cement and clinker volumes were flat at 7.02 million tonnes. But EBITDA for the April-December period turned positive to Rs 92 crore against loss of Rs 114 crore last fiscal, signaling a nascent turnaround.
After accounting for interest, depreciation and exceptional income, India Cements narrowed its pre-tax loss substantially to Rs 50 crore from Rs 180 crore. After tax, net loss stood at Rs 17 crore compared to Rs 294 crore profit last year that was aided by one-time gains from land sale.
The company said it is focused on raising funds to enhance plant efficiency and boost working capital, apart from selling non-core assets to improve cash flows.