India Cement rejigs deferred tax computation, posts Rs 76-cr profit in Q1

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A recomputed deferred tax helped The India Cements (ICL) to report a significant profit for the quarter ended June 2022.

The company has shown a profit of Rs 76 crore for the quarter under review, up from Rs 37 crore reported in the same quarter the previous year.

This follows the decision of the management to opt for the lower taxation rate considering the benefits arising out of it.

As a result, the company revised the computation of the deferred tax liability. The company now opted for a lower 25 percent tax. Earlier, it was in the 35 percent category.

“The company has opted for rates of income tax as specified under Section 115BAA of the Income Tax Act of 1961,” the company said.

Consequently, the company’s deferred tax liability has been recomputed resulting in a reversal of Rs 148.10 crore.

This has largely helped the company to report a healthy profit number for the June quarter.

Nevertheless, N Srinivasan, Vice-Chairman, and Managing Director is not certain of the outlook. According to him, it all depends on the coal price movements and the ability to raise cement prices.

“There is uncertainty around the globe. Availability of coal is not the issue. It is the cost at which you get coal which is the issue now,” he said.

To a query, he said ICL too had bought two shipments of coal from Russia. While variable costs went up significantly over the previous year, the net plant realisation (NPR) improved by a marginal 4 percent, resulting in an uncompensated cost increase.

Such an increase in variable cost alone was close to Rs 200 crore, and was the primary reason for the drop in earnings before interest, taxes, depreciation, and amortisation (EBITDA) to around Rs 39 crore, compared to Rs 165 crore in the same quarter of the previous year. Interest charges were at Rs 59 crore (Rs 55 crore).

Depreciation claimed Rs 52 crore (Rs 54 crore), resulting in a loss of Rs 72 crore for the quarter, compared to a profit of Rs 56 crore in the same quarter of the previous year. After taking into account the benefit of a lower taxation rate, the deferred tax liability has been recomputed.

Hence, the profit after tax (PAT), taking into account the revised deferred tax computation was Rs 76 crore for the quarter compared to Rs 37 crore earlier.

ICL has, in the meanwhile, seen some organisation re-jig. P Muni Reddy, a well-known face within the organisation, has become the new President (Operations). Parthasarathy Ramanujam is the new Chief Marketing Officer (CMO).

ICL has drafted Ravikrishna Iyer as the new HR head for the Group. CMO Parthasarathy Ramanujam said ICL had sold more than one lakh tonnes of CSK Cement in three months since its launch in March.