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Tag: operational costs

  • DMart’s Q3 shows 17.7 per cent uptick in revenue growth; Profits struggle

    DMart’s Q3 shows 17.7 per cent uptick in revenue growth; Profits struggle

    MUMBAI: In a bustling FMCG retail landscape, where affordability meets aspiration, DMart emerges as the champion for value-conscious shoppers. Much like a modern-day Spiderman swinging through a web of rising costs and fierce competition, DMart’s Q3 FY25 results reveal its unwavering commitment to delivering affordability.

    The results, unveiled on 11 January 2025, showcase a robust revenue growth trajectory, driven by the brand’s steadfast focus on cost-effective retailing and operational efficiency.

    Yet, beneath the surface of this success lies a battle with tightening profit margins—a challenge that highlights the resilience and strategic adaptability of this retail giant in an increasingly competitive arena.

    As DMart continues to redefine FMCG retail with its unbeatable value-for-money offerings, the Q3 results provide a lens into how it balances growth aspirations with the pressures of a rapidly evolving market.

    This is the story of a retailer that, much like a superhero, delivers hope to neighbourhoods while navigating the complexities of its mission.

    DMart’s consolidated revenue from operations climbed to Rs 15,972.55 crore in Q3 FY25, marking a 17.7 per cent increase compared to Rs 13,572.47 crore in Q3 FY24. For the nine months ending 31 December 2024, revenue surged by 16.9 per cent, reaching Rs 44,486.19 crore compared to Rs 38,062.28 crore during the same period last year. This growth was driven by a combination of new store openings and robust demand in core categories.

    However, other income declined to Rs 24.14 crore in Q3 FY25 from Rs 32.92 crore in Q3 FY24, suggesting subdued performance in ancillary revenue streams.

    Despite the revenue upswing, DMart’s consolidated net profit for Q3 FY25 fell to Rs 723.54 crore, a 4.9 per cent decrease from Rs 759.44 crore in Q3 FY24.

    The nine-month net profit stood at Rs 2,156.66 crore, reflecting a marginal growth of 0.4 per cent from Rs 2,147.12 crore during the same period last year.

    Margins remained under strain, with the EBITDA margin compressing due to higher costs in employee benefits (up by 30.1 per cent YoY to Rs 304.83 crore) and depreciation (up 20.4 per cent YoY to Rs 228.12 crore).

    DMart’s purchase of stock-in-trade for Q3 FY25 escalated to Rs 13,376.72 crore, an 18 per cent rise from Rs 11,330.93 crore in Q3 FY24, aligning with its expansion strategy. However, changes in inventory of stock-in-trade presented a marginal increase, indicating effective inventory control amidst fluctuating demand.

    The company also reported a contingent liability of Rs 235.98 crore under the Goods and Service Tax Act, reflecting ongoing regulatory challenges.

    DMart’s robust revenue trajectory signals strength in its core retail operations. However, declining profit margins highlight the need for cost optimisation and operational efficiency. The company’s cautious approach to expansion and investment in digital initiatives will be crucial in navigating market challenges and enhancing shareholder value.

  • HT Media’s Q2 report reflects continued losses amid revenue gains

    HT Media’s Q2 report reflects continued losses amid revenue gains

    Mumbai: HT Media Limited reported revenue from operations of Rs 42,375 lakhs for Q2 of fiscal year 2025, a 7.5 per cent increase over Q1 (Rs 37,851 lakhs) and a 7.6 per cent increase year-over-year from Rs 39,399 lakhs. This upward trend reflects the firm’s aggressive digital strategy and market resilience. However, operating costs outpaced revenue growth, with total expenses rising to Rs 48,867 lakhs from Rs 46,544 lakhs in the previous quarter, driven primarily by material costs, employee expenses, and finance charges. The escalating costs reflect broader inflationary pressures impacting raw materials and payroll, challenging HT Media’s path to profitability.

    For the six months ending September 2024, HT Media reported consolidated revenue of Rs 90,638 lakhs, marking a 3.9 per cent rise from Rs 87,215 lakhs in the same period last year. Yet, with rising operational expenses—particularly in staffing and other essential areas—the company recorded a net loss of Rs 5,695 lakhs. The quarter’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) stood at Rs 3,273 lakhs, although the profit before tax was reported as a loss at Rs 939 lakhs.

    The financial report underscores challenges in key segments. HT Media’s print and publishing revenue contributed the lion’s share at Rs 33,420 lakhs, but radio broadcasting and entertainment and digital segments also demonstrated resilience. However, employee benefits climbed to Rs 10,923 lakhs in Q2, a 7.5 per cent increase over Q1, impacting bottom-line growth.

    In line with its strategic restructuring, HT Media has sought to cut liabilities, including the partial disposal of investment property and reclassification of assets held for sale. The company’s long-term liabilities fell from Rs 25,303 lakhs in March 2024 to Rs 20,849 lakhs in September 2024, aided by asset sales and targeted debt management.  

    HT Media reiterated its commitment to recalibrate its portfolio, focusing on emerging revenue streams in digital content and radio. These areas saw significant audience engagement, with digital revenue climbing to Rs 5,551 lakhs, an increase of 18.7 per cent over the previous quarter.

    Looking ahead, HT Media remains focused on capturing digital market share, leveraging its audience reach across diverse platforms. Key challenges remain in managing operational costs amid inflationary pressures and aligning revenue generation with sustainable profit margins. With a current liability ratio of 0.85 times, the company plans to optimise cash flow by driving operational efficiencies.

     

  • ACC’s Q2 growth slows as rising costs slash profit by 39 per cent YoY

    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)

  • Mahindra Logistics’ Q2 FY25 shows revenue growth, but profit declines

    Mahindra Logistics’ Q2 FY25 shows revenue growth, but profit declines

    Mumbai: In the crowded lanes of India’s logistics market, even giants can stumble. Mahindra Logistics, a cornerstone of the Mahindra Group, seems to be navigating through a challenging terrain. Despite the conglomerate’s success across other sectors, the logistics arm is struggling to turn growth into profit. The unaudited consolidated results for Q2 FY25, ending 30 September 2024, reveal a dynamic yet troubled picture—while revenues surged, profit margins hit a roadblock, hinting at both promising opportunities and deep-rooted operational hurdles.

    The company reported a consolidated revenue from operations of Rs 1,521.10 crores for Q2 FY25, marking an 11 per cent increase from Rs 1,364.76 crores during the same quarter last year. This growth was primarily driven by strong performance in the supply chain management segment, which saw increased demand across industries. However, the company’s profit trajectory didn’t mirror this upward trend.

    Profitability took a significant hit, with a net loss of Rs 10.75 crores compared to a loss of Rs 15.93 crores in Q2 FY24. Despite efforts to improve operational efficiency, rising expenses eroded the gains from higher revenue. Operating costs surged by 12 per cent, reaching Rs 1,306.85 crores, driven by increased freight rates and employee expenses.

    Mahindra Logistics’ managing director & CEO, Rampraveen Swaminathan, acknowledged the challenges, stating, “While we are encouraged by the revenue growth, the increase in operating costs continues to be a headwind, impacting overall profitability.” The company also saw higher finance costs due to rising borrowing expenses, which climbed to Rs 19.12 crores, up from Rs 16.53 crores in the previous year.

    Further complicating the financial landscape, depreciation and amortisation expenses rose by 4 per cent, amounting to Rs 53.96 crores. Although Mahindra Logistics expanded its asset base to support growth, these costs weighed heavily on its bottom line.

    The balance sheet showed a marginal improvement in total assets, increasing to Rs 2,595.52 crores as of September 2024, compared to Rs 2,477.20 crores in March. Despite this, the company’s debt-to-equity ratio escalated from 0.56 to 0.87 over the past year, signalling a higher reliance on borrowings.

    In the face of these challenges, Mahindra Logistics continues to push forward, prioritising cost control and strategic investments. The management is optimistic about improving margins in the upcoming quarters, driven by initiatives to streamline operations and optimise its supply chain network.

  • Tanla Platforms faces growth hurdles amid mixed Q2 FY25 performance

    Tanla Platforms faces growth hurdles amid mixed Q2 FY25 performance

    Mumbai: Tanla Platforms’ second-quarter results for the fiscal year 2025, disclosed on 17 October 2024, reveal a business grappling with mounting expenses and stagnant revenue. Despite a series of strategic efforts, including the recent ValueFirst acquisition, the cloud communications company encountered a modest revenue decline compared to the previous year, alongside increased operational costs that pressured profitability.

    The company’s revenue from operations dipped to Rs 1,00,072.28 lakh, a slight reduction from Rs 1,00,859.22 lakh in the corresponding quarter last year. Total consolidated income remained nearly flat at Rs 1,01,098.10 lakh, showing only a minimal increase from Rs 1,01,493.34 lakh in Q2 FY24. Meanwhile, expenses surged to Rs 85,025.81 lakh, driven primarily by higher service costs and employee benefits, eroding the gains made from cost-control initiatives earlier in the year.

    “Our continued focus on enhancing operational efficiency has yielded some positive outcomes, but the evolving market dynamics present formidable challenges,” stated Tanla Platforms, chairman and CEO, D. Uday Kumar Reddy. The company’s service costs grew by 0.9 per cent, indicating the struggle to optimise expenses while sustaining the quality of operations.

    Tanla reported a profit before tax of Rs 16,072.29 lakh for the quarter, down from Rs 17,872.33 lakh a year earlier. Net profit attributable to shareholders also declined to Rs 13,021.15 lakh from Rs 14,254.99 lakh in Q2 FY24. The company’s earnings per share fell to Rs 9.70 from Rs 10.60, highlighting the strain on shareholder returns amid rising operational pressures.

    A deeper look at the expenses reveals an escalation in employee benefits, which rose 23 per cent to Rs 5,437.11 lakh, reflecting the cost of retaining talent in a competitive market. Additionally, depreciation and amortisation expenses increased by 3.8 per cent to Rs 2,344.08 lakh, indicating substantial investments in technology and infrastructure.

    The results also underscore Tanla’s ongoing strategic efforts, such as the acquisition of ValueFirst, which are yet to fully realise the anticipated synergies. The financials for the half-year ended 30 September 2024, showed a revenue increase to Rs 2,00,292.77 lakh from Rs 1,91,970.43 lakh in the same period last year, largely attributable to consolidating ValueFirst’s operations. However, profit before tax for the half-year saw a modest decline, signalling potential headwinds ahead.

    Tanla’s current assets increased to Rs 2,24,991.07 lakh, up from Rs 2,03,782.46 lakh as of March 2024, driven by higher trade receivables and cash reserves. This bolstered liquidity provides some buffer, but also raises questions about cash flow management, as trade receivables growth may indicate delayed collections.

    With the CPaaS market becoming increasingly competitive, Tanla faces the challenge of reinvigorating its growth trajectory while managing costs. The company’s reliance on expanding its client base and introducing new product offerings will be pivotal in driving future performance. Investments in digital infrastructure and potential acquisitions may further strain margins in the short term, but could pay off with stronger growth in the long term.