Birla profits up, more expansion planned

Birla profits up, more expansion planned
Published: 27 October 2009

Birla Corp Ltd has posted nearly a three times rise in its July-September net profit on higher cement sales and lower fuel prices.

It reported a net profit of INR1.52bn for the quarter, up from INR597m a year ago.

Net sales were also higher by 36 per cent at INR5.06bn as against INR3.71bn a year ago.

"The improved realisation in the cement division, higher sales coupled with softening of fuel prices and reduction in various costs, contributed to higher profitability," it said in a statement.

The Kolkata-based company plans to increase its cement capacity and has also announced its intention to acquire cement plants overseas.  Harsh V Lodha, Birla’s chairman, said: "We are examining some projects overseas in the emerging countries. With our cash flow comfortable, we are looking to take over some cement companies overseas.” The Kolkata-based firm, which makes cement, jute, auto trims and vinolium has earmarked INR23.5bn (US$500m) for expanding cement capacity to 11.5Mt from 5.8Mt over the next four years.

Birla will invest INR5.7bn in Chanderia at Rajasthan for setting up a 1.2Mt cement plant and another INR12bn in a 3Mt cement plant in Satna at Madhya Pradesh, while a 1Mt cement plant will come up in Assam at an investment of INR5bn. "For the Assam plant, we will sign the memorandum of understanding with the state government soon," Lodha said.

On fund raising options, Lodha said the company would be conservative in raising debt as it has cash reserve of around INR9bn (US$190m).  "Presently our cash reserve is comfortable. However, having said that, we will be raising INR6.5bn as debt for our projects in Rajasthan and Madhya Pradesh," he said, adding the company is in talks with various banks and the funds would be settled in FY10. (edited from Reuters India)