Birla Corporation FY20 net profit up 98% at Rs 505 crore

Birla Corporation Limited has recorded its highest ever EBIDTA and cash profit in financial year 2019-20. at Rs 1,421 crore and Rs 1,033 crore, respectively. The Company registered a growth of 38% in EBIDTA and 57% in cash profit over the previous year. Its net profit for 2019-20 at Rs 505 crore was 98% higher than the previous year.

For the March quarter. the Company registered a net profit of Rs 195 crore, up 51.9% over the previous year. despite dispatches grounding to a halt in later part of March. The Company's total income for the quarter at Rs 1,718 crore was down 9.4% year-on-year as dispatches were suspended towards the end of the financial year due to the Covid-19 pandemic. EBIDTA per ton for the March quarter grew 31% year-on-year to Rs 1045.

The Company reported higher profits during the March quarter with EBITDA for the quarter being higher by 11.7% over the previous year at Rs 373 crore. despite loss of volumes since 22 March due to the situation arising out of Covid-19.

During the March quarter. the Company reaped the benefits of lower fuel costs and its sustained investments into improving efficiency and cost rationalisation. The Company's subsidiary, RCCPL Pvt. Limited (formerly Reliance Cement Company Limited). has migrated to the new tax regime announced in October last year, and gains on account of the change have contributed significantly to the growth in consolidated net profit.

The Company's board on Friday, 22 May, decided to pay a dividend of Rs 7.50 per share. the same as last year. In view of the adverse business environment prevalent in the country, the Board decided to give a token amount of Re 1 as commission to the non-executive directors.

Despite lower sales, realisation for the March quarter was up 3.9% year-on-year at Rs 4,795 per ton. Realisation for the full year at Rs 4,811 per ton was up 5.7% while revenue for fiscal 2019-20 at Rs 7,001 crore was up 5.6% over the previous year.

Despite muted market conditions, Birla Corporation was able to raise price realisation through judicious adjustment of geographic and product mix aimed at increasing the share of blended and premium cement within its brand portfolio.

Capacity utilisation for the March quarter climbed down to 93% from 98% in the previous year. This was due to a 13% year-on-year drop in sales by volume to 3.3 million tons, which was consistent with the performance of the Company's peer group in comparable markets. Thanks to a 6% growth in sales by volume in the 11 months till February, capacity utilisation for the full year at 91% was up two percentage points-among the best in the industry.

During the year, the Company consolidated its share of key markets by continuing to focus on premium and blended cement. Sales of its premium slag brand, MP Birla Cement Unique (sold in eastern Indian markets), grew 18% over the previous year. Among new launches, the super-premium Ultimate Ultra brand with waterrepellent properties has made its mark in Madhya Pradesh, while Samrat Advanced (a premium variant of the Company's heritage MP Birla Cement Samrat brand) gained significant grounds in key markets of eastern Uttar Pradesh.

In fiscal 2019-20, sales of premium cement by volume grew 8% year-on-year and its share within the trade segment rose four p ercentage points to 41 % in a sign that the Company's investments into its brands and distribution assets are paying off. High-yielding blended cement accounted for 93% of sales by volume for the year, compared with 89% in the previous year, thanks to the Company's strategy of focusing on brand-conscious individual home-builders.

The Company's gross term debt at the end of March stood at Rs 4,226 crore compared with Rs 4,049 crore a year earlier. Net debt at the end of fiscal 2019-20 at ess than Rs 3,500 crore (-2.Sx the 2019-20 EBITDA) includes bank loans of Rs 543 crore for the under-construction cement plant at Mukutban in Maharashtra. The Company continues to adopt a strategy for pre-payment / refinancing of loans to reduce its cost of funding or reduce foreign exchange exposure, wherever opportunities exist. The board at its meeting on 22 May has also passed an enabling resolution for premature redemption / buy back of secured Non-Convertible debentures issued by the Company with a view to bring down borrowing cost, if such opportunity prevails in the market.

Birla Corporation is not taking the moratorium offered by the Reserve Bank of India in the wake of the Covid-19 pandemic on repayment of term loans and interest. In response to the situation arising out of the pandemic, the management, with the aim of protecting profitability, guarding financial metrics and conserving liquidity, is taking several initiatives to cut costs across the board and defer capital expenditure. These m easures are being taken despite securing financial closure for all projects currently underway.

The Company's Jute Division reported a full year EBITDA of Rs 23.37 crore as against Rs 20.20 crore in the previous year, registering a growth of 15.7%. Production during the year at 35,718 metric tons (37,308 metric tons in 2018-19) was impacted by the lockdown in March. Eight working days in the financial year were lost due to the lockdown. resulting in an estimated production loss of 959 metric tons.

The Company's constant thrust on value-added products has led to a 3.3% jump in exports during the year. Revenue from exports was at Rs 39.07 crore for the full year. compared with Rs 29.44 crore in the previous year. Growth in exports has helped sustain profitability amid mounting cost pressures.

Shares of BIRLA CORPORATION LTD. was last trading in BSE at Rs.405.75 as compared to the previous close of Rs. 411.45. The total number of shares traded during the day was 11852 in over 1034 trades.

The stock hit an intraday high of Rs. 420 and intraday low of 400.5. The net turnover during the day was Rs. 4822349.

Source : Equity Bulls

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