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Birla Corp’s Q4 net profit down 64%

May 19: Birla Corporation Limited, the flagship company of the M P Birla Group, recently reported a 63.92% drop in its net profit during the January-March quarter (fourth quarter) of 2013-14 to Rs 26.20 crore compared to Rs 72.63 crore in the final quarter of 2012-13, mainly on account of subdued cement prices in the markets especially in the eastern and northern regions, despite higher production.

During the quarter under review, cement production of the company stood at 1.92 million tons (mt) compared to 1.66 mt produced in the corresponding period of last year.

Apart from subdued demand, higher raw material and manufacturing costs and higher freight charges pulled down the net profit of the company during the quarter. “The performance has been affected by escalating manufacturing expenses, including the increase in the cost of coal, fly ash and gypsum and the impact of higher railway freight and diesel price rises,” the statement said.

Apart from coal and gypsum, higher cost for procuring limestone too pushed up the overall expenses during the quarter. The company had to procure almost 16% of its required limestone through third-party sources because of lower availability of limestone from Chanderia, the company’s limestone mine in Rajasthan.

For 2013-14, net profit of the company too dropped almost 52% to Rs 129.76 crore compared to Rs 269.82 crore in 2012-13. Cement production of the company during 2013-14 stood at 7.35 mt, up 14.01% from 6.44 mt produced during 2012-13.

Referring to the state of the cement industry, Harsh V Lodha, Chairman, Birla Corporation Limited, said, “Demand has not grown as expected owing to the economic slowdown, as an offshoot of the political instability. High interest rates also kept the industry subdued. Restricted availability of wagons continues to affect the industry, apart from growing freight and fuel expenses.”

The company, however, is hopeful that the cement industry … is expected to witness demand pick-up once infrastructural activities are undertaken by the new government.

The following table gives quarter-on-quarter and yearly performance of Birla Corporation Limited in 2014 and 2013 (in Rs crore):