Shree Cement Ltd.’s quarterly revenue rose, driven by the performance of its cement division.
The company’s income grew 15 percent to Rs 2,536 crore in the first quarter ended June. That’s in line with Rs 2,513 crore consensus estimate of analysts tracked by Bloomberg. Its power division, however, reported an operating loss of nearly Rs 1.4 crore compared to a profit of Rs 78.4 crore in the year-ago period.
H M Bangur, managing director of Shree Cement, told BloomberQuint that the power division is likely revive in the next six months. Excerpts from an interview:
When will the power division turn around?
We have suffered losses, but it was mainly due to a sudden increase in coal prices. We expect the division to do well in the quarter ending October or December as demand picks up in winter and fuel prices could go down. We are renewing focus on the power division because of the negative numbers; otherwise, it is not a big division. Also, we consume nearly half the power generated in-house.
But fuel and freight costs are on the rise?
Coal prices should come down in the coming months. For freight rates, the increase was a one-time fundamental change which has already taken place.
What is the contribution of the power division to the overall revenue?
Less than 6-7 percent.
What is your expectation from the cement business?
Our volumes have increased by 14 percent. We expect volume growth to be in the range of 12-13 percent for the year. For July-September, it should grow 12-15 percent year-on-year.
Are you facing any pricing pressure?
Every year, prices increase between 3 percent and 4 percent and it will only go up. The overall price hike for this year should be 3-4 percent throughout India.
What was the price hike in the previous year?
The hike was 6 percent last year, but it is lower this year.
Any specific reason for the lower price hike?
If you consider the increase in the past three years, it was around 4 percent and that’s what I expect.
What about EBITDA per tonne?
The EBITDA per tonne for the April-June quarter was Rs 1,150. In the commodity industry, we can’t say anything about EBITDA till we know the selling price, which is never known.
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