Salient points from Birla corp Q1 update:
|
Jun-21 |
Jun-20 |
(% change yoy) |
Mar-20 |
| REVENUE |
1,758 |
1,242 |
42 |
2,146 |
| EBITDA |
353 |
252 |
40 |
405 |
| CASH PROFIT |
289 |
172 |
68 |
338 |
| NET PROFIT |
142 |
66 |
115 |
249 |
| Realisation/ton |
4,933 |
4,906 |
1 |
4,833 |
| EBITDA/ton |
1,001 |
981 |
2 |
937 |
Sold 3.35 million tons of cement in June quarter growth of 38% YoY but lower by 8% than pre-pandemic year(Q1FY20) .
EBITDA margins of cement at Rs.1001 per ton despite significant cost pressure by commodity prices by optimising plant efficiency,fixed cost and logistics.
Realisation per ton during Q1 at Rs 4,933 at pre-pandemic level ,despite contraction in cement prices in central and northern markets.
Capacity utilisation of 90% during Q1.
Focus on sales and marketing initiatives on premium products which lead to gains in UP and MP states
Premium products share at 51% of sales, helping to increase realisation and reflect popularity of premium brands.
Share of green power (from waste recovery and solar power) increased to 22% of overall power consumption compared to 20% in FY21.
Mukutban project delayed by second wave of covid19. Manpower at project site has been increased and confident of commissioning in Q4.Cost of project revised from Rs 2,450cr to Rs 2,744cr.
Discl: Holding around 2% of PF
2 Likes
I had attended Birla Corporation AGM conducted on September 29, 2021. Some of the key points I noted during the AGM are given below:
• 6 weeks of output loss due to covid in FY21. Profit still highest in last year. EBITDA/tonne went up last year. Sustain capacity utilization of 85% last year despite covid. Sales by volume fell just 2% compared to FY20. Our company continues to focus on sales through trade channels and higher blended sales. 92% blended sales of cement. Premium cement contributing 50% through trade channels. Companies performance in March quarter of Fy21 was very good with 108% capacity utilization. Core sector were spared in Q1FY22 and things weren’t as bad as FY21.
• Monsoon this year has been good and this should translate to higher Kharif output and should bode well from rural demand in cement. Demand expected to grow by double digit this year. Commodity prices are higher but if demand remains good, we should be able to pass on the prices. 22% power contributed through renewable sources.
• Plant at Mukutban should come soon. Last two covid waves impacted the project. Project cost increased to 2700 crore. Q4 of this year will be commissioning. Fire the kiln in December this year. State of the art plant will receive GST incentive for 20 years. Improve profitability of the company. Chanderia expansion 150 crore annual production cement capacity expanded by 0.5 million tonne. 1800 crore debt refinanced. 9.2% to 7.8% reduction in interest cost. Net debt/EBITDA of 2.6 times. Mukutban expansion 20 million tonne. Embark on next phase of growth. 25 million tonne by 2025. Plans are afoot to expand to 30 million tonne by 2027. Work on coal blocks to continue. Brahmpuri coal block in 2024 start. Production of coal from these plants will lead to lower power cost.
• Digital initiatives taken by the company. These initiatives have been taken even before the pandemic hit us. Using AI in two plants. Every disruption creates opportunities.
• First wave of covid took us by surprise. Second time around, as a business, we were better prepared. Company managed it better.
• Capacity – we had targeted capacity of 25 million tonne in 2025. We are now looking at 30 million tonne capacity in next few years. Strategy has been made by Mr Pathak and we will come back to shareholders once approved by board.
• Solar and WHRP – we are working towards it. Come a long way and further improve on this factor. Apart from environment sense, it makes business sense as well. Well aware about it and we will explore this.
• Expansion and debt in future? We will be conservative on debt front while achieving targeted level of capacity for future endeavors.
• Incentive receivable – leave no stone unturned to get them on time. Sometimes we get it sometimes we don’t. We are at it and recover them.
• Decline in jute business is on account of availability of manpower as well as cyclone in Bengal. Being investing to modernize the plant and go towards value added product. Started seeing benefit. Jut business is expanding value added production and started getting repeat orders from MNCs. Reduce our dependence on compulsory jute packaging order.
• Higher proportion of new plant vis a vis old plant will help us in increasing EBITDA. In that respect we are reasonably well placed. Dominant in central India – UP and MP. Reasonably present in North and East – Rajasthan. New plant will be Western India. Coming in an area where not much supply is there and demand is expected to be good. Lot of infrastructure development out there. Already supply some currently to develop market.
• Price trend – monsoon has been good. Heavy rains which are there – construction work goes down – trend a bit down but in medium term because of rainfall – kharif should do well. Current quarter – acute sand problem – did face a bit of problem. Crop sold at decent prices.
• Expanding capacities in areas where we believe market growth will be good and where we will be in advantageous position.
• Reliance Cement – has added a lot of value to Birla Corp in terms of modern plants. Reliance plants parameters are amongst the best in India. Proud of acquisition we did. Lot of expansion in RCCPL as well.
• Most of the progressive organizations do not compromise recruitment based on any biases.
• Operational part – limestone reserves – we are having reserves of 30 years of current operations and any
• Cost reduction – this exercise will continue. Adding conventional areas for cost reduction like electricity reduction. Alternative fuels, WHRS, solar, digitalization etc have been undertaken. With years to come, some improvement will be there.
• Kundanganj – not dropped the project but rationalized the project. Alternative ways to augment capacity – some already implemented and some more are under discussion. Need and target remains the same. Capex reduction has taken place. Without that capacity will increase.
• Value added products – continuously increasing proportion like wall putty, chemicals. Working on few other products as well. Increase this basket. Have resource which will drive this.
(Disclosure: Invested; Note: There can be some factual inaccuracies while taking notes)
15 Likes
it is not a hidden gem i think. The Company has delivered good profit growth of 33.85% CAGR over last 5 years.
(not recommending, just a personal opinion)
