Birla Corporation Ltd (BIRLACORPN) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Birla Corp Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Ravi from HDFC Securities. Thank you, and over to you, sir.
Rajesh Ravi (HDFC Securities): Thank you, Steve. Good afternoon, everyone. On behalf of HDFC Securities, I welcome all of you to Q2 and H1 FY '27 earnings call of Birla Corporation Ltd. From the management side, we have Mr. Sandip Ghose, MD and CEO, Mr. Aditya Saraogi, Group CFO, and other senior leaders from the team. I now hand over the call to Sandip Ghose sir for his opening remarks. After his presentation concludes, we'll start the Q&A session. Over to you, sir.
Sandip Ghose (Birla Corporation Ltd): Very good afternoon to all of you. Pleasure connecting with you in this festive season.
Sandip Ghose (Birla Corporation Ltd): while everybody is gearing up for Diwali. Bombay, I suppose, is already on a celebration mode. As far as we are concerned, I don't think we are this quarter's result are exactly celebratory. We know it is modest and subdued largely due to factors which everybody knows about, especially on the cost side. Everybody has been hit by the fuel prices primarily, and that's we have no exception in that. But where we are probably affected a little more is our main presence, our very substantial presence is in the central region, and in central region, again, we play much more on trade, on the trade side, which all of you know, and the prices there have been depressed. I was just checking. We are after it's 4 years since some major acquisitions and mergers happened, consolidation in the industry, and thereafter, also, for a period of more than a year or so, there've been other consolidations, which took place. And all pundits believe that consolidation is going to be helping in terms of pricing for the industry. But we have not seen that happening, especially in the regions where we operate. We haven't seen any such impact of the consolidation. In fact, that has kept the prices soft in particular also not just in the popular segment, but even in what is called the premium segment of the A category. Some market leaders who were earlier commanding a premium over the rest of the their peer group have diluted their price positioning, and they continue There is a continuous you know, dynamic tension in terms of retaining market share, due to which the trade prices have not shown any significant increase despite even in months when there has been fairly healthy demand. So, this does affect us because we are, again, at the cost of repetition, we are very, very skewed towards trade sales and blended cement sales. Where people have the headroom are in non-trade. Those we operate, as you know, in about right now, this quarter, we operated 85% capacity utilization, but we go up to 90%, 95%, whereas many of our peer group or larger players also operate below, even 70% capacity utilization, and they are all having more expansion plans on the anvil or in the pipeline. So, there is, therefore, they do have an anxiety to garner market share or retain market share. But this plays out largely in the non-trade segment. But the non-trade segment, okay, there was some degree of rational behavior in the last quarter towards the end, due to which the non-trade prices, which had really plummeted, there was correction. I'm talking primarily of Central India because that's where our major interests lie. But the non-trade prices increase doesn't really help us because we are we continue to dominate or be skewed heavily towards the trade sector. Some amount of increases, we are seeing some upticks in October, but I wouldn't call them very significant uptick, and I wouldn't really call them, you know, very solid increases, which may not slip if the market conditions change. We'll come to that later. So, that has been our basically the bane for us, whereas we've continued within that, what we can do in terms of increasing our premiumization, not just in this core market, but also in markets where our premium percentage is low. For example, in Rajasthan, we have increased our premium percentage there. We have in Maharashtra, where we are operating, we have consciously cut down on leads and trying to focus
Sandip Ghose (Birla Corporation Ltd): our trade market shares or even non trade market shares in proximate markets of Vidarbha and Khandesh to get it out there. So, we have tried those mixes. In terms of cost in some, for some factors, our cost increase while common with other people, in certain places we benefited because of our captive coal mines ourselves. The second captive coal mine Bikram has come is on-stream. From there, also we are getting captive coal for our things. But we had some carry forward of shutdowns in that unit due to which we had to buy some amount of clinker from third party and the clinker cost hit us, so you may find that our cost increase relatively is higher than some of the other industry players and, but that is largely the impact of purchased clinker which we had in this particular quarter. This is broadly I think the overall context I will place and I'll come back to you towards the end to give our view of how the market will behave or how we are seeing the the next two quarters or the last two quarters of the year or H2 playing out. And state wise view, we will share with you. But I will now pass on the mic to my colleagues. First, Aditya Saraogi, our CFO, the group CFO, then Rajat Prusty and we have a new head of National Sales, Mr. Kalidas Pramanik has taken early superannuation, but he remains attached to the company in consulting capacity, but in his place, we have Mr. Tamal Pal, who was our Strategy Head of the company. Tamal has been with this our company for a long time, but before that also in the days of the RCCPL, the Reliance days, he was also, he has worked for Reliance. He is a graduate from Indian School of Business Hyderabad. And he is now taken over this role and I wish Tamal all the best. He has got into the groove already in the last couple of months and he is on it. And Tamal will also speak to you giving some of his you know, views or early impressions of the market. Mr. Saraogi, please.
Aditya Saraogi (Birla Corporation Ltd): So the increase in cost was primarily driven by the escalation in fuel prices where both the prices of petcoke as well as domestic coal saw a steep rise. Petcoke of course was due to geopolitical reasons, as we all are aware. And even the domestic coal, one, the production was affected because of the monsoon season. The mines, coal mines, Coal India mines were flooded. And second is because of a very high power demand by the power sector, a coal demand, coals were diverted on a preferential basis to power sector. So, the rakes were not available for supply to sectors other than power sector. So, that created a huge gap between demand and supply, leading to unprecedented increase in domestic coal prices, too. And apart from the coal prices, the other heads where we saw major increase was the increase in the cost of packing material. So, these were the two heads where most of the increase of cost were seen. Going forward as we see, at least in the near term, we do not see any respite on both these accounts. The fuel prices we expect, in fact the fuel prices, especially international prices are expected to go up even further from the current levels. And as far as the domestic fuel is concerned, once the winter sets in and there is a lessening in the power demand and the supply improves in by Coal India subsidiaries, I think that should bring down the prices of domestic fuel. But on the whole, at least in Q3, we are expecting the fuel prices to increase from Q2
Rajat Prusty (Birla Corporation Ltd): Yeah, good afternoon to all. This is Rajesh here. As rightly said by MD sir and Saraogi sir last quarter, it was more of an availability of the coal, also in fact we had to plan many things to ensure that the continuous operation of the plant because of flood situation in many of the mines of Coal India and specially in the MP part, a lot of challenges were faced and we could able to see that the plant run without any issue and also optimize the cost. So, our two things, three front actions which has helped. One is enhancing the production from our Bikram coal which we just started last quarter and continuously we are focusing to increase the production also in the Bikram and using part of the coal in the other systems like apart from the CPP to kiln and also optimize our fuel mix and raw mix. All these things in the plant to ensure that how to contain the cost apart from the availability. Second one is the renewal power where our continuous focus was there. Last quarter, it was 32 plus percentage and going forward we are planning to reach to the level of 45% in next one year time, for which already many projects or many activities are being planned and third thing is on improving the AFR uses also which already our focus has started on many plants to see that how we can really optimize our fuel cost. And going forward our captive mines use will further increase not only for our MP plants but in for Rajasthan plants also based on the fuel pricing and the overall optimizations. So, overall, I just want to say that this is a very difficult time for all the manufacturing units and everyone put their best effort to see how we can contain our cost and going forward, what are the initiatives which I mentioned will continue to drive or reduce the cost.
Aditya Saraogi (Birla Corporation Ltd): Thank you, we now open the house for question and answer session.
Moderator: Thank you sir, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shravan Shah with Dolat Capital. Please go ahead.
Shravan Shah (Dolat Capital): Hi sir. Good afternoon sir. Thank you for the opportunity. Sir, couple of questions. So, two-three things, but everything is this kind of interlink. So, now given that our all the capacities the the expansion plan, 6.2 million ton to come in FY '29. So, how the volume growth will come? Obviously, last time we guided 20 million ton for this year but for even FY '28, that is one. Second, given the cost increase and whatever the price hike is happening, that is mostly in the non-trend which non-trade which you highlighted. So, given that scenario, how do we see the second half in terms of the price increase for us and the cost, so net-net the profitability. Do we see this 482 per ton EBITDA per ton which we achieved in Q2 could we even the similar or lower in third quarter also?
Sandip Ghose (Birla Corporation Ltd): There are a couple of points before handing over to Mr. Saraogi. You know, this is lot of it is crystal ball gazing. So, the cost part of it, I think Mr. Prusti has already commented, Mr. Saraogi has commented. A lot of it, as you know, is linked to the international situation, which is also anybody's guess. It's very unpredictable. We don't know how it is happening. What Mr. Saraogi talked about the the domestic power and coal situation that is one degree of prediction which we can make on the cost side. While we will do our better than our best to increase our dome- our captive coal as well as see how we
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