Birla Corp reported a lower net profit of INR111.88 crore in the first-quarter ended June 30, 2011, compared to a INR118.28 crore net in the earlier corresponding period. The 5.41% decline in profit follows a marginal drop in Birla Corp’s April-June sales revenue at INR642.12 crore (INR651.99 crore).
Company officials attributed the decline in 1Q profits and turnover to reduced ex-works realisation in the cement division and high cost of power & fuel. Elaborating further, Birla Corp chairman Harsh V Lodha said, profitability was affected because of growing input costs and poor offtake of cement.
"Demand for cement was also affected on account of elections in five states during the first-half of the quarter under review. Additionally, bunching of capacities, coupled with poor demand for cement from the government as well as infrastructure and realty sectors, are affecting the profitability of cement companies," Lodha added.
Birla Corp has applied to the ministry of environment and forests to increase the capacity of the New Chittor Cement Works from 1.2Mt to 2.7Mt. If approved, the company’s total cement capacity will stand enhanced to 10.8Mta.