ACC reported a 60% decline in net profit to ₹147 crore for the June quarter as revenue fell 8% to ₹5,790 crore. The drop was driven by lower sales volumes and higher operational expenses related to supply agreements with parent firm Ambuja Cements. Investors are monitoring the impact of plant maintenance and rising fuel costs on future margins.
Detailed Coverage
ACC, an Adani Group entity, faced a challenging June quarter with net profit sliding to ₹147 crore from ₹375 crore in the same period last year. This 60% year-on-year decline reflects the pressure on the company’s bottom line, driven by an 8% contraction in revenue to ₹5,790 crore and a 7% drop in sales volume to 10 million tonnes.
A key driver behind the financial decline was the Master Supply Agreement (MSA) with its parent, Ambuja Cements. The company noted that a larger share of sales was routed through this agreement during the quarter. While the MSA is designed to help both companies manage supply based on regional demand, it also impacted ACC's ability to maintain higher margins. This, coupled with planned maintenance shutdowns at several large integrated manufacturing units, limited the total volume of cement the company could sell.
Operational profitability also felt the heat, with Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) falling 41% to ₹457 crore. Beyond the internal supply arrangements, the company is dealing with broader sector pressures. Global geopolitical tensions have kept freight and logistics costs elevated, and there has been a noticeable increase in the prices of imported fuels like petcoke and thermal coal. Given that cement production is highly energy-intensive, these cost spikes are a common headwind across the industry.
Looking ahead, the company is working toward the proposed amalgamation with Ambuja Cements to create a unified 'One Cement' platform. This process has received a no-objection certificate from SEBI, though it remains subject to approval by the National Company Law Tribunal (NCLT), with completion expected by fiscal year 2027. Meanwhile, ACC is pushing forward with capacity expansion projects at Salai Banwa and Kalamboli to drive future growth.
For investors, the immediate monitorable will be how the company manages its fuel inventory cycle. With a 60-90 day lag in fuel costs, the impact of recent price increases may continue to affect profit margins into the seasonally slower September quarter. Shareholders may track the progress of the NCLT merger process and whether the upcoming capacity additions can effectively improve sales volumes and operational efficiency in the second half of the year.