Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Birla Corp Ltd (BOM:500335, Financial) has maintained a strong focus on premium brand positioning, with over 55% of trade volumes in the premium category.
- The company has achieved a 91% weighted average capacity utilization, particularly driven by the Mukutban plant.
- Investments in cost reduction initiatives, such as Project Shikhar and Project Unnati, have shown positive results.
- The company is expanding its geographic footprint, with new grinding units planned in Bihar and other regions.
- Birla Corp Ltd (BOM:500335) has maintained a strong commitment to transparency and high standards of governance.
Negative Points
- The company's Q1 FY25 results fell below market expectations, particularly in terms of EBITDA per ton.
- Realization drops were higher than expected due to changes in market-wise mix and regional composition.
- Pricing pressures in key markets like UP and Madhya Pradesh have negatively impacted profitability.
- The company has faced significant challenges in Rajasthan due to heavy discounting and price competition.
- The Jute division has experienced poor performance due to industry-wide issues, resulting in a loss.
Q & A Highlights
Q: Given the 0.7% decline in volume this quarter, what is the revised guidance on volume growth and EBITDA per ton for FY25?
A: We are not providing any revised guidance at this juncture due to the nebulous market situation. We will try to meet our previous targets but will not commit to specific numbers now. Mukutban's volume for the last quarter was 5.93 KT.
Q: Can you provide the lead distance for this quarter and the CapEx for Q1 and the full year?
A: The lead distance was around 350 kilometers. We are maintaining our CapEx guidance for the year, which may be slightly less but remains on track.
Q: What is the breakup of trade and non-trade sales, and how has the regional mix shifted?
A: Trade has remained the same as previous quarters, with a slight 1% decline. Premium sales have increased from 55% to 59%. The regional mix has shifted, with more sales in Maharashtra, which has lower premium prices compared to UP.
Q: Why has there been a significant decline in EBITDA per ton despite Mukutban's incentives?
A: Mukutban's incentives have been booked, but Kundanganj's incentives have ended. The weighted average realization has been affected by regional price variations and market conditions.
Q: What are the plans for the new units in Kundanganj and Prayagraj, and when will they be operational?
A: Kundanganj is expected to start operations by early next fiscal year. Prayagraj is still in the preparatory stage and will follow after Kundanganj.
Q: What is the rationale behind the NCD issuance, and what are the current maturities for the year?
A: The NCD issuance is an enabling resolution for potential future needs. The average cost of borrowing is 7.9%, and the current maturities for the year are INR375 crores, including INR135 crores of NCD.
Q: Can you provide details on the receivables due from government incentives?
A: The receivables from government incentives are about INR500 crores, mostly from the UP government, with a small part from MP and Maharashtra.
Q: What are the current fuel costs, and what is the expected trend for Q2?
A: The fuel cost in Q1 was INR1.48 per million kilo calories. We expect a further reduction of about INR0.05 in Q2.
Q: What are the plans for deleveraging the balance sheet, given the current interest coverage ratio?
A: We maintain that our debt-to-EBITDA ratio is comfortable and within our target range. We are not slowing down on CapEx and aim to reach 25 million tonnes by 2027 while keeping our debt within manageable levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
