Due to change in the demand scenario since mid-January HM Bangur, MD of Shree Cements expects improvement in cement demand as well as pricing. He expects this to continue till elections.
The weak EBITDA margins seen in quarter ended December was mainly due to weak demand and reduction in prices. According to Bangur weak cement realisations have hurt the company's performance in the quarter gone by.
However, he expects EBITDA margin improvement of more than 21 percent going forward. The company had seen 18 percent sales volume growth but the prices had come down by 5 percent, says Bangur.
Net profit for Shree cements for the quarter ended December came in at Rs 115.5 crore Vs Rs 217.4 cr year-on-year (YoY) and net sales for the company came in lower at Rs 1,317 Cr versus Rs 1,401.3 cr (YoY). Their EBIDTA has come at Rs 269 crore versus Rs 363 crore Y-o-Y. The EBITDA margins stood at 20.5 percent versus 25.8 percent Y-o-Y.
Also read: Heidelberg Cement promoters hike stake in Indian arm
Below is the interview of HM Bangur, MD of Shree Cements with Sumaira Abidi and Anuj Singhal on CNBC-TV18.
Sumaira: On all parameters this time around you have taken a bit of a hit. We do understand that other income too has come in lower at about Rs 10 crore, can you add some more colour to this and take us through where you saw exceptional weakness?
A: The exceptional weakness is there in the cement prices. Our volumes have grown by about 18 percent but the prices have come down by 5 percent and naturally the cost increase is there. So the EBITDA margin has been badly hit but we expect to do better in the coming quarter.
Anuj: Can you give us a number, what would be your margin and also your EBITDA per tonne, how are things going to progress from here?
A: The numbers cannot be given in any commodity industries but from mid-January when there is a big change in demand scenario because of the Indian calendar, the prices have improved, the demand has also improved and we think that January to June some impact of elections will be there - pre-election demand and other things. So our margins should be better than 21 percent, which is the lowest, in the past four-five years this has been one of the lowest quarters.
Sumaira: Also coming to your power segment, over there you have taken a bit of a hit; it is down about 26 percent in terms of segmental performance down to about Rs 300 crore, can you tell us what were the realisations per tonne as well as the volumes over there?
A: For power generation the net realisation has come down from Rs 383 to Rs 334 compared to last year same quarter and in the first quarter it was still better at Rs 397. So the power realisation is down by 15 percent or so and the sales also have come down by 30 percent.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
