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Berger Paints Reports Q2 Profit Dip

Profit drop attributed to raw material costs.

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Berger Paints India posted a 7.61% decline in net profit for Q2 FY25, impacted by higher raw material costs and a challenging economic environment. The company’s profit after tax fell to Rs.221.5 crore compared to Rs.239.8 crore in the same period last year, marking a notable dip for the paint manufacturer amidst fluctuating market conditions.

Revenue for the quarter, however, showed resilience with a 5.3% increase, reaching Rs.2,568.9 crore, driven by steady demand in urban and semi-urban regions. Despite revenue growth, margins were under pressure due to rising input costs, primarily in raw materials such as titanium dioxide and packaging expenses, which have seen price hikes globally. Berger Paints noted that while there has been an increase in decorative and industrial paint sales, it has been offset by the strain on profitability.

To mitigate future cost impacts, Berger Paints is implementing strategic cost-cutting measures and focusing on operational efficiencies. Additionally, the company is exploring price adjustments in its product lines to pass on a portion of the cost burden to end consumers, though it remains cautious of demand sensitivity. Berger Paints also aims to expand its product range in the premium paint segment and strengthen its supply chain to better manage costs.

The Indian paint industry continues to experience demand, driven by housing and infrastructure growth, yet companies face headwinds from cost volatility. Berger Paints remains optimistic about the long-term outlook and aims to maintain growth momentum by leveraging its distribution network and investing in sustainable and high-quality product innovations.

Concrete

NCLT approves Burnpur Cement’s capital reduction scheme

The move aims to optimise the capital structure of the company.

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The National Company Law Tribunal (NCLT), Kolkata, has approved Burnpur Cement Limited’s scheme for the reduction of capital, as outlined in an exchange filing by the company. The petition was filed under Section 66 of the Companies Act, 2013, in accordance with the National Company Law Tribunal (Procedure for Reduction of Share Capital of Companies) Rules, 2016.

The approved scheme involves reducing the company’s issued, subscribed, and paid-up equity share capital from Rs 86.12 crore, divided into 8,61,24,363 equity shares of Rs 10 each, to Rs 17.22 crore, divided into 1,72,24,873 equity shares of Rs 10 each, fully paid-up. The move aims to optimise the capital structure of the company.

The NCLT order specifies that the capital reduction will not affect any ongoing actions by government or regulatory authorities related to violations of any laws in force. Burnpur Cement is expected to file the certified copy of the order with the Registrar of Companies (RoC) in e-form INC-28.

The bench hearing the matter included D. Arvind (Technical Member) and Bidisha Banerjee (Judicial Member).

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Cement manufacturers report margin decline in September quarter amid lower prices

The all-India average cement price saw a year-on-year decline of 11%

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Cement manufacturers have reported a decline in margins during the September quarter, primarily due to lower prices, which led to reduced sales realization. Smaller companies such as Nuvoco Vistas Corp, JK Cement, Birla Corporation, and Heidelberg Cement experienced a drop in both topline and sales volume. However, leading players like UltraTech Cement, Ambuja Cement, and Dalmia Bharat performed better, primarily due to several recent acquisitions that have bolstered their market position.

The industry faced challenges, including an extended monsoon, floods, and slow government demand, all of which contributed to weak market conditions. Despite these challenges, power, fuel, and other operational costs remained stable.

In terms of pricing, the all-India average cement price saw a year-on-year decline of 11% from ₹348 per 50 kg bag in June 2024 to ₹330 per bag in September, although it rose by 2% month-on-month. In FY25, the average cement price saw a 10% year-on-year reduction, down from ₹365 per bag in FY24.

UltraTech Cement reported a 68% capacity utilization and a 3% growth in sales volume, despite an 8.4% year-on-year decline in sales realization for grey cement. Similarly, Ambuja Cements saw a 9% increase in sales volume, reaching 14.2 million tonnes, but its EBITDA was 15% lower year-on-year at ₹1,074 crore due to lower price realizations.

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JK Lakshmi Cement Posts Loss

JK Lakshmi Cement records ?19.24 crore loss.

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JK Lakshmi Cement reported a net loss of ?19.24 crore for the second quarter of FY25, reversing the previous year’s profits. The cement giant faced a challenging period, with rising input costs and subdued demand in certain markets impacting its financial performance. The company also noted a decline in sales volumes during the quarter, which further contributed to the loss.

Despite the tough quarter, the company remains optimistic about its long-term prospects, citing the ongoing demand for infrastructure development and the potential for recovery in key regions. The management is focusing on cost optimization strategies and exploring new markets to overcome the current challenges.

The net loss marks a significant deviation from the company’s usual profit trajectory, raising questions about the impact of macroeconomic factors and inflationary pressures on the cement sector as a whole. With raw material costs and transportation expenses climbing, the company is grappling with maintaining margins while trying to sustain its market position.

JK Lakshmi Cement’s management is working to boost operational efficiency and improve financial health in the coming quarters. Analysts are keenly observing whether the company will rebound in the second half of the fiscal year, as infrastructure projects and government spending are expected to provide support to the industry.

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