Shree Cement MD Bets On Growth In Second Half On Cost-Cutting, Premiumisation Measures

Shree Cement Ltd. is focused on cost-cutting measures and expanding its premium product portfolio to drive Ebitda growth in the next two quarters, said Managing Director, Neeraj Akhoury.

In the September quarter of the current financial year, net profit of the Kolkata-headquartered cement producer slipped by 83% year-on-year to Rs 76.6 crore versus Rs 447 crore in the same quarter last year. Revenue from operations fell 15% YoY to Rs 4,054 crore from Rs 4,774 crore.

Commenting on the results, Akhoury told NDTV Profit that the second quarter was challenging because of excessive monsoon and softening of demand due to delayed capex spending.

“Going forward, in Q3 and Q4, our expectation is that demand will be stronger. We believe it will be in the range of 8–9% growth,” he said.

Shree Cement’s Ebitda for the quarter under review nosedived 30.8% YoY to Rs 613 crore from Rs 886 crore in the corresponding quarter of the last fiscal.

Despite the sharp decline, Akhoury is hopeful of a turnaround in the second half, on the back of enhanced focus on cost optimisation and premiumisation of the portfolio.

“We would try to give a lower cost versus previous quarters. We are hopeful that with the demand going up and our cost strategy working out, with a focus on premium products, we should see a better Ebitda in the next two quarters,” he said.

Akhoury pointed out that the company had reduced its costs by 8% in Q2 on a yearly basis. “We have reduced the cost by about 8% last quarter. In Q3 and Q4, we would like to have the same numbers, 8–9%,” he said.

In Q2, the company's focus was more on price and premium products rather than volume growth, according to the top executive, who added that the focus on premium products will continue. "We have grown to about 15% now. We were about 9% a year back. Going forward, we will try to first stabilise our premium product sales at about 15% and then also grow it, in the coming quarters to higher levels.”

Shares of Shree Cement Ltd. fell 3.75% during Tuesday's trade to touch an intraday low of Rs 23,500 apiece on the NSE. The stock was trading 1.3% lower at Rs 24,100 at 1:05 pm in comparison to the benchmark Nifty 50's decline of 0.49% at the time.

The company's stock closed 0.65% lower at Rs 24,259.90 apiece on the NSE on Tuesday against the benchmark Nifty 50, which declined by 1.07% to 23,883.45.