MAM
ACC’s Q2 growth slows as rising costs slash profit by 39 per cent YoY
Mumbai: In a world where owning a home is the ultimate badge of success, the foundation of that dream rests on cement. But what happens when the very industry that builds these aspirations feels the ground shifting beneath its feet?
ACC Limited, a dominant player in the Indian cement industry, has reported its unaudited financial results for Q2 of FY25, revealing a story of modest growth tempered by significant cost pressures. Despite a 3.9 per cent year-on-year (YoY) increase in revenue, reaching Rs 4,607.98 crore, the company’s net profit after tax dropped sharply by 39 per cent, from Rs 384.29 crore in Q2 FY24 to Rs 233.87 crore this quarter.
The company’s revenue from operations for the quarter ended 30 September 2024, stood at Rs 4,607.98 crore, an uptick from Rs 4,434.67 crore in the same period last year. This increase can be attributed to strong demand in key markets, especially for cement and ready-mix concrete, though the overall boost was muted compared to earlier quarters. On a half-yearly basis, the total income reached Rs 9,987.38 crore, showing a 0.7 per cent increase over the previous year’s Rs 9,921.88 crore.
However, operational challenges have taken a toll. Total expenses climbed to Rs 4,443.76 crore, an increase from Rs 4,126.95 crore in Q2 FY24. Key contributors to this rise include a surge in power and fuel costs, which now stand at Rs 772.07 crore, and higher freight and forwarding expenses of Rs 948.95 crore, reflecting rising energy prices and logistical bottlenecks. The company’s cost of materials consumed also saw a notable increase of 17 per cent, indicating an inflationary impact on inputs.
The jump in costs has had a cascading effect on profitability. ACC Limited’s operating performance further underscores the strain on profitability, with the Q2 FY25 operating EBITDA slipping to Rs 436 crore, translating to a margin of 9.5 per cent, down from Rs 549 crore and a 12.4 per cent margin in Q2 FY24. The half-year figures reveal a similar story, as the H1 FY25 operating EBITDA declined to Rs 1,115 crore with an 11.4 per cent margin, compared to Rs 1,320 crore and a 13.7 per cent margin in the same period last year. This drop reflects the growing cost pressures that continue to weigh on the company’s bottom line, and profit before tax (PBT) has declined significantly to Rs 318.20 crore, compared to Rs 515.58 crore in the previous year. The net profit margin also dropped, reflecting the difficulties in passing on cost increases to consumers amid intense competition.
Depreciation and amortisation expenses rose to Rs 231.69 crore, while finance costs saw a minor increase, now at Rs 33.29 crore, indicating tighter control over financial liabilities but still exerting pressure on earnings.
Despite the financial squeeze, ACC continues to prioritise long-term investments. Capital expenditures have been allocated toward upgrading existing facilities and exploring renewable energy sources to mitigate future energy cost risks. The company’s non-current assets, including property, plant, and equipment, stood at Rs 14,252.34 crore as of 30 September 2024.
ACC is also grappling with external pressures. The ongoing litigation with the Competition Commission of India (CCI), which could result in penalties exceeding Rs 1,100 crore, adds a layer of uncertainty to its financial outlook. The company has set aside provisions for these risks, but the legal shadow continues to loom large.
With an eye on stabilising costs and improving efficiencies, ACC will need to leverage its market position and operational agility to weather the ongoing financial headwinds. ACC Ltd, whole time director & CEO, Ajay Kapur said, “Our performance in Q2 reinforces our standing as a frontrunner in the cement industry. Our financial results this quarter – fuelled by higher volumes, cost optimisation, increasing efficiencies, and agility – build the momentum for our growth strategy for FY’25 and beyond. Our growth is being driven by robust demand for high-quality cement products across all markets, as well as our continuous efforts to optimise operations and lead on all ESG parameters. Our leadership status is highlighted in our drive for operational excellence supported by innovation, sustainability, and a customer-centric approach. We continue to deliver strong value for our stakeholders as we aim for sustained profitability through our competitive advantage.”
Key Financial Highlights:
• Revenue from operations: Rs 4,607.98 crore (up 3.9 per cent YoY)
• Net profit after tax: Rs 233.87 crore (down 39 per cent YoY)
• Total income: Rs 9,987.38 crore (up 0.7 per cent YoY for H1)
• Power and fuel costs: Rs 772.07 crore (down 13 per cent QoQ)
• Freight and forwarding expenses: Rs 948.95 crore (down 13.5 per cent QoQ)
Brands
YES Bank hands the keys to SBI veteran Vinay Tonse as it bets on a new era
Former SBI managing director appointed as YES Bank’s new MD and CEO
MUMBAI: YES Bank is done rebuilding. Now it wants to grow. The private sector lender has appointed Vinay Muralidhar Tonse as managing director and chief executive officer-designate, with RBI approval secured and a start date of April 6, 2026 confirmed. The three-year term signals the bank’s intent to shift gears from crisis recovery to full-throttle expansion.
Tonse, 60, is no stranger to scale. Most recently managing director at State Bank of India, he oversaw a retail book of roughly $800bn in deposits and advances, one of the largest in the country. Before that, he ran SBI Mutual Fund from August 2020 to December 2022, a stint that saw assets under management surge from Rs 4.32 lakh crore to Rs 7.32 lakh crore across market cycles. Add stints in Singapore and four years leading SBI’s overseas operations in Osaka, and the incoming chief arrives with a genuinely global CV.
His academic grounding is equally solid: a commerce degree from St Joseph’s College of Commerce, Bengaluru, and a master’s in commerce from Bangalore University.
The appointment follows an extensive search and evaluation process by the bank’s Nomination and Remuneration Committee. NRC chairperson Nandita Gurjar said the committee unanimously backed Tonse, citing his leadership track record, governance credentials and ability to drive the bank’s next phase of transformation.
Non-executive chairman Rama Subramaniam Gandhi was unequivocal. “I am certain that Vinay Tonse, with his vast experience as a senior banker, will propel YES Bank to its next phase of growth,” Gandhi said, adding that the bank remains focused on strengthening its retail and corporate banking franchises and expanding its branch network.
Rajeev Kannan, non-executive director and senior executive at Sumitomo Mitsui Banking Corporation, the bank’s largest shareholder, said Tonse’s experience across retail, corporate banking, global markets and asset management positioned him well to lead the lender. SMBC said it looks forward to working with Tonse and the board as YES Bank pursues its ambition of becoming a top-tier private sector lender anchored in strong governance and sustainable growth.
Tonse succeeds Prashant Kumar, who took the helm in March 2020 when YES Bank was in freefall following a severe financial crisis, and spent six years painstakingly stabilising the institution, rebuilding governance and restoring operational scale. Gandhi was generous: “The bank remains indebted to Prashant Kumar, who is responsible for much of what a strong financial powerhouse YES Bank is today.”
Tonse, for his part, struck a purposeful note. “Together with the board and my colleagues, I remain deeply committed to creating long-term value for all our stakeholders,” he said, pledging to build on Kumar’s foundation guided by his personal motto: Make A Difference.
Beyond the balance sheet, Tonse played cricket at college and club level and represented Karnataka in archery at the national championships — sports he credits with teaching him teamwork, situational leadership, discipline and focus. In quieter moments, he reaches for retro Kannada music, classic Hindi songs, and the crooning of Engelbert Humperdinck, Mukesh and Kishore Kumar.
YES Bank has its steady-handed rebuilder in Kumar to thank for survival. Now it has a scale-obsessed growth banker at the wheel. The next chapter starts April 6.
