Birla Corp Q2 net falls 42% on shutdown, costs

Birla Corp Q2 net falls 42% on shutdown, costs
Published: 31 October 2008

Birla Corp Ltd has posted a 42 per cent drop in its July-September net profit due to high input costs, temporary shutdown of a cement plant and floods that affected its key markets.

It reported a net profit of INR597m for the quarter, down from INR1.03bn a year ago. Sales were also lower at INR3.71bn as against INR3.93bn a year ago.

The operating margins were affected by increase in the cost of inputs such as coal, electricity and freight cost, coupled with lower realisations, the company said in a statement.

Clinker output was also lower as one of its cement plants was shut for 66 days in the quarter for an upgrade, while cement sales were hurt by floods in the Uttar Pradesh region, it said.

Birla Corp expects pressure on prices and margins on cement to continue as new capacities come up in the industry, leading to more supply while demand to decline owing to slowdown in the housing and realty sectors, Birla Corp said.