Birla Corp to increase focus on premium cement brands to boost profits

Birla Corporation is focusing on increasing the sale of its premium cement, aiming to make the segment its key driver for profits. The company plan to invest more in its new flagship brand: Perfect Plus. The premium portfolio accounted for 22 per cent of the company’s total sales three years back, but now comprises 39 per cent of annual revenue.

The company introduced several premium brands in the first quarter of this fiscal year. While Perfect Plus and MP Birla Ultimate were introduced in northern India, Ultimate Ultra - a premium cement with water repellent properties - was launched in the central zone.

The Unique brand of cement, another premium slag variant, also strengthened its hold in the eastern region. This brand now accounts for around 42 per cent of the trade sales in West Bengal.

Birla Corporation has rolled out Perfect Plus nationally which has now become its flagship brand. Nevertheless, Chetak and Samrat - both from the economy category - still hold strong market share in the north zone.

“The Perfect brand is now our flagship brand and we will be putting in more money on this brand in the future as well. The way we are standardising our brands, one cannot tell from which factory a particular brand has been manufactured”, Sandip Ranjan Ghose, the company’s chief operating officer told Business Standard.

The Perfect brand of cement, previously owned by Reliance Cement Company (RCC), landed up with Birla Corporation as part of the Rs 48-billion takeover deal in 2016.

“On one hand we have been focussing on increasing the share of blended cement and on the other, we have been encouraging customers to upgrade their purchase to premium cement”, Ghose said.

The company has now increased the share of blended cement from 71 per cent to 88 per cent on a year-on-year basis, while in the Q1 period, sales of premium products grew 12 per cent by volume to account for 37 per cent of total sales.

“That shows how well we were able to integrate the operations of RCC with ourselves”, Ghose said.

As a result of these initiatives and a larger volume play in its core markets, the MP Birla Group’s flagship company’s June quarter net profit jumped 68 per cent to Rs 141 crore while EBIDTA for the quarter stood at Rs 402 crore – a 49 per cent increase over the last year. Revenue also jumped by 14 per cent to touch Rs 1,844 crore.

The company has been aggressively adopting technology to reduce its per tonne per kilometre (ptpk) cost from Rs 2.48 to Rs 2.35 via the road and rail mode and from Rs 3.25 ptpk to Rs 2.82 ptpk via the road mode.

It is also stepping up use of modern technologies like robotics, blockchain, data analytics, artificial intelligence, internet of things and others to further improve operations and reduce logistics costs.

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