Birla Corporation Reports 58.9% Drop in Q2 Net Profit to ₹37 Crore

Birla Corporation Ltd has reported a 58.9 per cent year-on-year decline in its consolidated net profit for the September quarter, coming in at ₹37 crore. The company had recorded a net profit of ₹90 crore during the corresponding period of the previous fiscal year.

Despite the sharp fall in net profit, the company's consolidated revenue from operations rose 9 per cent to ₹2,441 crore, compared to ₹2,233 crore a year earlier. However, profitability took a hit as consolidated EBITDA declined to ₹254 crore from ₹332 crore.

During the quarter, cement sales volume grew by 7 per cent to 4.54 million tonnes, while overall realization rose 2 per cent to ₹4,925 per tonne. The company noted that realizations were marginally lower sequentially due to weakening prices in core markets through July and August. Capacity utilisation remained steady at 85 per cent.

The margin contraction was largely attributed to rising input costs. Clinker costs increased by 13 per cent, while power and fuel expenses went up by 15 per cent, driven by a 64 per cent climb in pet coke prices. Consequently, the cement division’s EBITDA per tonne fell to ₹482 from ₹712, with its EBITDA margin contracting by 490 basis points to 9.8 per cent.

On the operational front, blended cement accounted for 86 per cent of sales, while premium products grew 17 per cent to 2.38 million tonnes. The trade channel's share of sales increased to 82 per cent from 79 per cent.

To mitigate cost pressures, Birla Corporation increased its green power consumption to 32 per cent from 30 per cent. The company also commenced coal extraction from its Bikram mine in Madhya Pradesh, which is projected to yield 1.8 lakh tonnes in the second half of the fiscal year.

In the jute division, revenue rose 17 per cent to ₹155 crore, and cash profit stood at ₹13.01 crore compared to ₹4.64 crore a year ago. This performance was achieved despite a 26 per cent drop in production caused by a raw jute shortage.

For the first half of the financial year, Birla Corporation's net profit fell 27.1 per cent to ₹153 crore, while total revenue grew 8.3 per cent to ₹5,111 crore.

Looking ahead, the company stated that cement realizations have started to improve from October. However, cost pressures are expected to persist and continue weighing on overall profitability.

"This earnings report highlights the intense margin pressures traditional manufacturing sectors face when input costs spike unexpectedly. Even with steady volume growth and higher revenue, a sharp rise in pet coke and fuel prices can significantly erode the bottom line. For established enterprises, scaling green energy consumption and securing captive raw material sources, such as coal extraction, are crucial steps to absorb macro-level cost volatility and protect operating margins over the long term." — Dr. Shishir Gupta, Founder & CEO, StartupLanes