Lower selling prices during the quarter resulted in net plant realisation dwindling by 11 per cent from the same quarter last year, with an impact of over Rs 105 crore. However, the variable cost also came down sharply by 11 per cent, which offset the impact to an extent of Rs 67 crore, said the management.
Further, interest charges were higher by Rs 10 crore at Rs 92 crore, while depreciation was at the same level of Rs 64 crore. The loss for the quarter before extraordinary items was at Rs 71 crore against a profit of Rs 62 crore for the corresponding quarter in FY 2019.
The slowdown of the economy, coupled with outbreak of Covid-19 pandemic during the quarter, resulted in reduction in volume by more than 11 per cent during the year under review. The selling price of cement remained generally soft after the first quarter of the financial year resulting in low realisations which adversely affected the bottom line.
The industry in the south had a negative growth of 15 per cent during the quarter and sjrank by around 8 per cent during the year under review. The company had a drop in production of 18 per cent during the quarter.
Given the backdrop of low demand growth further fuelled by Covid-19 situation, the company could achieve only a capacity utilisation of 71 per cent for the year as against 79 per cent in the previous year.
Capacity utilisation for the industry as well as for the Company is still below the normal levels. The prices have recovered smartly from April 2020.
Expectations of a good rabi crop and the forecast of normal south west monsoon augur well for the rural economy. However, given the current Covid-19 situation and the re-introduction of lockdown in certain parts of Tamil Nadu, it is very difficult to predict where economic growth will be in the immediate two quarters. Given that India’s economy is driven by its high domestic consumption and a strong rural base, it is expected that the economy will bounce back once the pandemic is under control.