/ -- DCW Limited ("the Compay" or "DCW"), specialty chemicals company headquartered in Mumbai, declared the financial results for the quarter and financial year ended on 31st March 2020 on Monday, 06th July 2020.
Impact due to Covid-19 on business operations-
The lockdown and several restrictions imposed on the movement of goods posed several challenges to the business of DCW limited towards the end of March 2020. The Company's operations were hit substantially during that period. The Company has gradually restarted factory operations since 15th April 2020, adhering to the safety norms prescribed by various authorities.
Impact on financials: Disruption in the supply chain, coupled with lockdowns imposed by the authorities, impacted production and logistics. This led to a revenue loss of ~ INR 550 Mn in Q4FY20. Without this, the revenue would have been in-line with revenue of Q4FY19, coupled with this adverse fluctuation in foreign currency due to COVID-19, which has resulted in depreciation of rupee against all major currencies has also affected, Q4 & FY20 EBITDA without this EBITDA Margins would have been in-line with FY19 EBITDA and EBITDA Margins.
Update on liquidity and moratorium
As per the moratorium facility announced by the central government, the company has availed the moratorium facility from 31st March 2020 as a precautionary measure to preserve the precious cash in hand. The company has sufficient liquidity in hand to cover all the liabilities and opex.
Employee Welfare:
The company has supported all the employees during this pandemic. The company has paid full wages and salaries to all employees during the lockdown period. The Company has also adopted Work from Home for all its office employees and other staff to minimize and contain the spread of COVID -19. The company also assisted all the migrant employees for their stay and food in the hostel premises while ensuring all the safety and social distancing norms. The Company is taking utmost care of its workforce like periodic sanitization, social distancing, mandatory mask-wearing, thermal check at the gates, maintaining hygienic conditions, etc.
Serving the society during the uncertain times:
DCW is highly committed to serving society, even during these uncertain times. The Company is assisting the local government by supplying Sodium Hypo Chlorite (WHO recommended disinfectant) to the local community around the Sahupuram plant for sanitization purposes helping fight the spread of COVID-19.
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During this period of lockdown, as a part of our Corporate Social Responsibility, plenty of activities were executed to safeguard the public not only in and around our factory but also covered the entire region, which harvested a lot of appreciation from the general public. DCW donated Personal Protective Equipments (PPEs) to local (Arumuganeri & Authoor) police stations and also distributed more than 4,000 packets of ration packets (consisting of wheat, dal, rice oil, etc.) to the poor helping the local villages around Sahupuram and Dhrangadhra in tackling the difficulties resulting from COVID-19.
Financial Performance - Q4 & FY20
Revenue from operations for FY20 stood at INR 12,858.9 Mn, compared to INR 13,528 Mn in FY-19, degrowth of 4.95%. Revenue from operations for Q4FY20 stood at INR 2,981.5 Mn, degrowth of 17% on a YoY basis, primarily due to COVID-19 related disruptions.
Without the COVID-19 related disruptions, the Q4FY20 financial and operating performance would have been significantly better.
EBITDA declined to INR 1,550 Mn for FY-20, compared to INR 1,665 Mn in FY-19. The EBITDA was impacted primarily due to
Factory shutdowns due to COVID-19
Significant impact on the pricing of finished products
Adverse forex movements during Q4FY20
Inventory valuation losses on the stock of finished products.
EBITDA for Q4FY20 stood at INR149.14 Mn compared to INR 558.63 Mn in Q4FY19. EBITDA margin for Q4FY20 stood at 5% compared to 15.5% in Q4FY19. The decline in EBITDA margin was due to plant shutdowns and loss of revenue.
FY20 profit after tax fell to INR -267.6 Mn on a YoY basis from INR -42.7 Mn. Q4FY20 profit after tax fell 727% on a YoY basis to INR -267.62 Mn. Cash PAT for FY20 stood at INR 614.12 Mn. The profitability for FY20 was impacted due to the following reasons -
The finance cost for FY20 stood at INR 1,075 Mn., an increase of 3.3% on a YoY basis.
A higher depreciation charge in FY20 stood at INR 872 Mn. compared to FY19 of INR 834 Mn., an increase of 4.6% on a YoY basis.
Commenting on the results, Mr. Vivek Jain, Managing Director, DCW Ltd., said, "This pandemic impacted our operations and supply chain towards the end of the quarter. Nonetheless, we are looking at this as an opportunity to strengthen our capabilities and revisit our growth and value creation strategies. We have resumed our plant operations from the mid of April and currently operating at the best possible capacity considering difficulties caused due to social distancing norms. The company has undertaken various cost reduction initiatives, cash flow control measures and periodic reviews of receivables and order book. The company has not witnessed any additional risk to recover assets like inventories, investments, and receivables due to various risk mitigation strategies implemented by the company. We have not seen any impact on internal financial controls as well. The Company is well-positioned to fulfill its obligations and also does not foresee any significant impact on the business due to the non-fulfillment of the liabilities by any party."
"We are following all the rules and regulations laid out by the local, state, and central authorities. We have sufficient liquidity and workforce to scale up the operations as the demand picks up, and social distancing norms are relaxed. We will continue to monitor the order book and ensure swift plant operations while focusing on efficient raw material sourcing, liquidity, reduction in the opex, and employee health."
Q4&FY20 Financial Highlights -
(in INR Mn)
Particulars
Q4FY20
Q4FY19
YoY%
FY20
FY19
YoY%
Revenue
2,981.5
3,594.1
-17%
12,858.9
13,564.0
-5%
EBITDA
149.4
558.6
-73%
1,551
1,655
-6%
EBITDA Margin (%)
5.0%
15.5%
-1050bps
12.1%
12.2%
-10bps
Profit After Tax (PAT)
-250.6
149.1
-268%
-267.6
-42.7
-527%
PAT Margin (%)
-8.4%
4.1%
-1250bps
-2.1%
-0.3%
180bps
Financial Performance - Specialty Chemicals Division - Q4 & FY20
The company's specialty chemical division consists of SIOP and C-PVC. The company is one of the few large-scale synthetic iron oxide manufacturers for red and yellow pigments. The company is the only C-PVC manufacturer in India. The company's specialty chemicals facility is based out of Sahupuram, Tamil Nadu.
The company is focusing on increasing the revenue mix from specialty chemicals. The revenue mix between Commodity Chemicals: Specialty Chemicals for FY20 stood at 11%:89% % compared to 8%:92% in FY19.
SIOP Division
Revenue for FY20 stood at INR 407.4 Mn, a robust growth of 22% on a YoY basis. Revenue for Q4FY20 stood at INR 150.5 Mn, compared to INR 78.7 Mn in Q4FY19.
EBIT for FY20 stood at INR -14.68 Mn, a growth of 72% on a YoY basis. EBIT for Q4FY20 stood at INR -2.54 Mn, compared to INR -19.76 Mn in Q4FY19.
The revenue growth in SIOP was primarily due to the debottlenecking of the capacities.
C-PVC Division
Revenue for FY20 stood at INR 1,033.1 Mn, a robust growth of 25% on a YoY basis. Revenue for Q4FY20 stood at INR 217.9 Mn, compared to INR 224.4 Mn in Q4FY19.
EBIT for FY20 stood at INR 295.1 Mn, a growth of 119% on a YoY basis. EBIT for Q4FY20 stood at INR 61.1 Mn, compared to INR 27.6 Mn in Q4FY19.
The revenue growth is attributed to favorable government policies like anti-dumping duty and robust domestic demand.
Q4&FY20 Financial Highlights -
( in INR Mn)
Q4FY20
Q4FY19
YoY%
FY20
FY19
YoY%
SIOP
Revenue
150.5
78.7
91%
407.4
333.4
22%
EBIT
-2.5
-19.8
-87%
-14.7
-53.4
-72%
EBIT Margin (%)
-2%
-25%
-
-4%
-16%
-
C-PVC
Revenue
217.9
224.4
-3%
1033.1
825.7
25%
EBIT
61.1
27.6
121%
295.1
134.6
119%
EBIT Margin (%)
28%
12%
-
29%
16%
-
Financial Performance - Commodity Chemicals Division - Q4 & FY20
The company's commodity chemical division consists of Caustic Soda, Soda Ash and PVC. Soda Ash facility is based out of Dhragandhra, Gujarat, while Caustic Soda and PVC facilities are based out of Sahupuram, Tamil Nadu.
Caustic Soda Division:
Revenue for FY20 stood at INR 4,704.9 Mn, modest degrowth of 1% on a YoY basis. Revenue for Q4FY20 stood at INR 1058.6 Mn, compared to INR 1515.5 Mn in Q4FY19.
EBIT for FY20 stood at INR 843 Mn, a growth of 9% on a YoY basis. The increase in EBIT is largely attributed to operating leverage and various cost reduction initiatives by the Company.
Soda Ash Division
Revenue for FY20 stood at INR 2,000.5 Mn compared to INR 2,130.0 Mn on a YoY basis. Revenue for Q4FY20 stood at INR 426.89 Mn, compared to INR 548.67 Mn in Q4FY19.
EBIT for FY20 stood at INR 425.89, degrowth of 20% on a YoY basis. EBIT for Q4FY20 stood at INR 77.61 Mn, compared to INR 127.52 Mn in Q4FY19.
PVC Division
Revenue for FY20 stood at INR 4,564.9 Mn, degrowth of 15% on a YoY basis. Such degrowth was led by loss in production on account of Covid-19 related shutdowns and softening of prices during the later period of FY20. Revenue for Q4FY20 stood at INR 1100.27 Mn, compared to INR 1203.34 Mn in Q4FY19.
EBIT for FY20 stood at INR (109.51) Mn, degrowth of (188.3)% on a YoY basis. EBIT for Q4FY20 stood at INR (77.49) Mn, compared to INR 87.79 Mn in Q4FY19.
Q4&FY20 Financial Highlights -
(in INR Mn)
Q4FY20
Q4FY19
YoY%
FY20
FY19
YoY%
Caustic Soda
Revenue
1058.6
1515.5
-30%
4704.9
4776.1
-1%
EBIT
78.6
457.8
-83%
843.0
771.8
9%
EBIT Margin (%)
7%
30%
-
18%
16%
-
Soda Ash
Revenue
426.9
548.7
-22%
2000.5
2145.5
-7%
EBIT
77.6
127.5
-39%
425.9
534.0
-20%
EBIT Margin (%)
18%
23%
-
21%
25%
-
PVC
Revenue
1100.3
1203.3
-9%
4564.9
5345.8
-15%
EBIT
-77.5
87.8
-188%
-109.5
165.9
-166%
EBIT Margin (%)
-7%
7%
-
-2%
3%
-
About DCW
DCW is a specialty chemicals company, manufacturing PVC, C-PVC (chlorinated polyvinyl chloride), Caustic Soda, Soda Ash, and Synthetic Iron Oxide Pigment (SIOP). The Company is the only domestic manufacturer C-PVC, a versatile thermoplastic used mainly for manufacturing hot and cold-water pipes, industrial liquid handling, and a wide range of products serving a variety of applications. DCW's Caustic Soda, SIOP and PVC Units are in close proximity to the Tuticorin Port in Tamil Nadu, giving the Company a competitive edge over its peers to export its products to global markets.
For more details, visit: http://www.dcwltd.
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