Birla Corporation’s net profit dropped 59% to ₹37 crore in the September quarter, despite a 9% revenue growth. Rising pet coke and raw material costs eroded profitability, offsetting a 7% increase in cement sales volume. Investors may watch how energy prices and cement realizations influence future margins as the company ramps up its captive coal production.
Birla Corporation reported a sharp decline in profitability for the September quarter, with net profit sliding 59% to ₹37 crore. The result highlights the intense pressure currently faced by cement manufacturers, where rapidly rising operational costs are outpacing revenue growth. While the company achieved a 9% increase in consolidated revenue to ₹2,441 crore, the bottom line suffered significantly due to a steep spike in fuel and raw material expenses.
Cost Pressure and Margin Squeeze
The primary drag on performance was the sharp increase in energy costs. Pet coke prices surged 64% compared to the previous year, which directly impacted the power and fuel expenses for the company. Consequently, the EBITDA per tonne for the cement division fell to ₹482, down from ₹712 in the same period last year. This operational challenge led to a 490 basis point compression in EBITDA margins, which settled at 9.8%.
Volume Growth vs. Realization
The company’s cement division managed to increase sales volume by 7% to 4.54 million tonnes, with capacity utilization remaining steady at 85%. While realization per tonne saw a modest 2% rise, the company reported a sequential dip in cement prices in its core markets during July and August. This pricing trend, combined with persistently high input costs, creates a challenging environment for maintaining profitability.
Operational Adjustments and Outlook
To counter rising costs, Birla Corporation is focusing on operational efficiencies. The company has increased its green power consumption to 32% of total requirements. Additionally, the firm has begun coal extraction at its Bikram mine in Madhya Pradesh, which is expected to provide 1.8 lakh tonnes of supply in the second half of the current fiscal year. While these efforts aim to reduce costs, the overall impact on the bottom line will depend on broader energy price trends.
In contrast to the cement business, the jute division showed resilience. Despite a raw material shortage that reduced production by 26%, the division achieved a 17% revenue growth to ₹155 crore and a cash profit of ₹13.01 crore. For investors, the key monitorables moving forward will be the trend in energy prices, the ability of the company to stabilize cement realizations, and the operational benefit derived from its captive coal and green energy initiatives.