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JK Lakshmi Cement to hike price by Rs 10/bag; expects 10% volume growth for FY22

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JK Lakshmi Cement to hike price by Rs 10/bag; expects 10% volume growth for FY22

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“We have taken a price increase of about Rs 15 primarily on account of the considerable increase in pet coke and coal prices. Still the entire cost increase has not been covered. But going forward, based on the demand as it tapers out in the coming quarters, we will have to have a look at the price increase,” said Sudhir Bidkar, CFO of the company, in an interview to CNBC-TV18.

JK Lakshmi Cement Ltd, on Friday, reported a 6.06 percent decline in consolidated net profit for the September quarter at Rs 87.29 crore, hit by higher input costs. The company had posted a profit of Rs 92.93 crore in the July-September period a year ago, JK Lakshmi Cement said, in a regulatory filing. The company’s revenue from operations slipped 6.80 percent to Rs 1,208.80 crore from Rs 1,131.74 crore in the year-ago period.

"As a result of a steep increase in prices of pet coke & diesel, the cost soared considerably which affected the profitability adversely. Company's volumes also got impacted due to transporters strike in Chhattisgarh plant which affected our east dispatches for nearly 15 days in this quarter," JK Lakshmi Cement said, in a post-earnings statement. The reduced volumes and increased costs brought down the EBIDTA to Rs 178.88 crore in the July-September quarter from Rs 205. 05 crore a year ago.
In an interview with CNBC-TV18, Sudhir Bidkar, CFO of the company, discussed the company’s earnings and the outlook.
On volume growth, he said, “We are expecting volume growth in this year of about 10 percent and premium sales account for almost 30 percent of our trade sales. There, we get a premium of about Rs 25 to 30 per bag. Overall, we are expecting a 10 percent growth in volumes; we had a 16 percent growth but going forward,  overall for the year we expect a 10 percent growth in the volumes.”
He added “We are doing about 57 percent trade sales and 43 percent in non-trade sales.”
On price hikes, Bidkar said, “We have taken a price increase of about Rs 15 primarily on account of the considerable increase in pet coke and coal prices. Still the entire cost increase has not been covered. But going forward, based on the demand as it tapers out in the coming quarters, we will have to have a look at the price increase.”
According to him, the company will have to take at least up to Rs 50 per bag to cover the entire cost, but for now they will be trying to push a hike of another Rs 10 or so depending on the demand.
On fuel mix, he said, “Earlier, we were using pet coke in a big way, almost 80 percent used to be pet coke, but because of the recent increase in the pet coke prices, we have brought it down to around 50 percent. 40 percent is coal and 10 percent is biomass. Linkages, we have only in the east that is for our Durg plant, where about 25 percent of our requirement is met through the linkage.”
On EBITDA per tonne, Bidkar said, “Considering the fact that we are having a good amount of inventory procured at lower prices, we should be clocking close to about Rs 900 plus in the coming quarters.”
For full management commentary, watch the video.
-With PTI inputs
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