C.K. Birla Group company HIL Ltd. benefited from a reorientation of strategy amid the pandemic that saw it tap new markets for building materials especially in tier II and III cities, helping it perform well even as business from major cities slowed.
The building materials segment, consisting of AAC blocks, panels and boards, which was aligned 90% to construction projects in big cities moved to tier II and III locations as the government set up COVID centres and dwellings for labourers were established at various project sites. “We started contributing to that business,” said MD and CEO Dhirup Roy Choudhary.
“Of the total building material sales in 7-8 months this year, 40-45% came from these new ventures we moved into.”
The rural economy, which fared well in the backdrop of good rainfall, gave a fillip to HIL as it forayed into new markets, especially in east and south India. Roofing, building and polymer solutions are HIL’s main businesses in India, while the acquisition of German flooring solutions firm Parador has given it access to many countries, especially in Europe. HIL has 22 manufacturing facilities in India and two in Europe.
Though not as large as the roofing business, which is also heavily dependent on the rural markets, in revenue terms, the demand growth for building solutions esulted in HIL’s manufacturing facilities operating at full capacity. “We are full in our [building solutions] capacity,” the MD said. “Now we will have to add new capacity to grow,” he added. We will do it organically,” he said during a virtual interaction. He said details pertaining to the expansion could be shared once the Board approves the expansion.
In roofing and polymer solutions enough capacities are available, he said. For the quarter ended December, the company had posted a consolidated net profit of ₹52.53 crore (₹9.63 crore) and revenue from operations of ₹802.87 crore (₹586.58 crore).
Highlighting how HIL benefited from an emphasis on digital tools during the pandemic, to identify and cater to areas where businesses were active, maintaining production and performance, managing raw material stocks, reorienting costs, improving cash flows while ensuring safety of workforce, Mr. Choudhary said “COVID-19 did not affect our business except in April.”
On Parador, which HIL had acquired about two years ago, he said the flooring firm did well with a strategy it adopted a year before to reach customers through DIY retailers as also more recent online brand store. Many customers opted to renovate their homes with the funds meant for vacation that they could not take, he added.