Orient Cement has rough start to fiscal as it struggles for demand

Orient Cement reported a weak set of earnings for the June quarter. Volumes came in at 1.38 metric tonnes, which were up merely a percent and the firm also witnessed a sharp margin contraction.

The cement company's managing director and chief executive, Deepak Khetrapal, told CNBC-TV18 that the company had a rough start in the first quarter of the 2023 financial year and the major challenges came from the cost side.

The stock, however, was up 2.02 percent in trade on BSE and 3.90 percent in one month.

“We have had a very difficult and disappointing quarter. We knew that last year’s EBITDA (earnings before interest, taxes, depreciation, and amortisation, a measure of a company's overall financial performance) could not be repeated," he said, quoting the company did close to Rs 1,400 crore per tonne then.

"The challenge has been from the cost-push side. We were aware that nobody could escape it. In our case, it looks even more jarring because we were managing to stay much below the cost levels of many other industry colleagues,” said Khetrapal.

While the cost pressure persists, the company is beginning to see some signs of softening. "For softened fuel prices to kick into profit and loss will take a couple of months till we run out of the inventories that were procured and have covered with ourselves.”

Khetrapal said demand has been poor, and the company has not been able to pass on costs. “The ability to pass on the cost to the customers is a function of robust demand, and in the markets that we are operating in, the demand has been very poor,” he said.