India Cements post 77% drop in 1Q net profit

India Cements reported a 76.5 per cent fall in its net profit to INR169.6m (US$2.3m) in the first quarter of FY20-21 from INR722.1m in the 1QFY19-20.

Total income declined 48.3 per cent to INR7.603bn in the 1QFY20-21 from INR14.72m in the year-ago period. EBITDA reached iNR1.59bn despite a steep drop in volumes due to the COVID-19 pandemic.

“By first quarter results, it is just like reaching at the crossroads. We have dealt with the COVID pandemic, we have neither asked any employees to go home for a thing they are not responsible, nor cut any wages. At this time, we are not looking at the volume of cement, but at the business of cement. The cash and carry policy of no credit being given to channel partners has provided us enough liquidity and along with the increased prices, we have been able to manage the first quarter,” India Cements vice chairman and MD, N Srinivasan, said.

He highlighted that the performance the company could achieve was because of its prudent management,with the breakeven point in Q1 being possible at 33 per cent with around 35 per cent capacity utilisation.

The company’s key markets have been impacted by the lockdown.The cement industry in the southern states saw a contraction of 45 per cent in production in the first quarter with Maharashtra and Tamil Nadu among the worst affected states. However, the construction industry has started to recover slowly from May due to the pent-up demand and improved rural demand.