DCM Shriram fell 2.61% to Rs 291.35 after consolidated net profit dropped 29% to Rs 207.38 crore on 0.9% decline in net sales to Rs 1,862.99 crore in Q4 March 2020 over Q4 March 2019.
Consolidated profit before tax tanked 33.3% to Rs 247.91 crore in Q4 March 2020 as against Rs 371.59 crore in Q4 March 2019. Current tax expenses slumped 72.7% to Rs 23.82 crore in Q4 March 2020 as compared to Rs 87.36 crore in Q4 March 2019. The Q4 result was declared post market hours yesterday, 3 June 2020.
Revenues from operations were dragged by lower chemicals ECU (Electro Chemical Unit) prices. ECU prices fell 35% YoY (year-on-year) leading to lower revenues by Rs 158 crore. Volumes lost 4% YoY on account of nationwide lockdown due to COVID-19. Poly Vinyl Chloride (PVC) volumes also tumbled 22% YoY as a result of nationwide lockdown due to COVID-19.
However, revenues were boosted by higher domestic sugar volumes up by 38% YoY and distillery volumes up 83% YoY consequent to commissioning of second distillery 200 kilo-litres per day (KLD) and higher sugar prices 4% YoY during Q4 FY20. Sugar Free Solutions (SFS) value added inputs revenues up 22% YoY with enhanced focus on this segment.
The nationwide lockdown affected part of the group's operations. Sugar and bioseed businesses, being categorized as essential items, continued normal operations. Chemicals, Shriram Farm Solutions, Fertilizer resumed operations in early April 2020. Plastics, Fenesta and Cement operations resumed by mid-May 2020.
Fertilizer and SFS have reached normal level of operations. Chloro-vinyl, Fenesta and Cement businesses are operating at 50-70% capacity and the production is improving in line with market demand. The operating and financial performance of the company has been subdued during this period as a result lower volumes and prices for some of the businesses.
Overall, the company has maintained adequate cash in hand and undrawn bank limits. It has met all its business, statutory and financial commitments as per the due dates and is maintaining adequate liquidity for future commitments.
Meanwhile, the Company has decided to enter the business of country liquor as a forward integration of sugar distillery operations. The board has approved an investment of about Rs 42.40 crore to set up country liquor bottling plant of capacity of 11,000 cases per day at Hariawan (UP) sugar unit. This will also enable swing capability between ethanol & country liquor.
Commenting on the performance for the quarter and year ending March 2020, in a joint statement, Ajay Shriram, the chairman & senior managing director and Vikram Shriram, the vice chairman & managing director, has said that: "We continue to progress our strategic direction of enhancing scale, strengthening cost competitiveness, synergistic integration of operations and strong consumer value propositions.We expanded chlor-alkali, pvc and distillery capacity during the year. The new capacities have stabilized and are helping the company in growing volumes continuously. The 66 MW power plant commissioned at Kota in Q4'20 to replace the old 50 MW power plants will help in reducing costs and improving reliability of operations.The chlorine based chemical businesses, a forward integration to chlor-alkali operations, are being grown over a period and we plan to continue to progress the same over next few years."
"The recent developments relating to COVID-19 adversely impacted some of our operations-leading to complete shutdown and then operating at lower production levels. The product prices also recorded softness. We are very hopeful that the position will improve continuously as more and more sectors open up. We are also working on utilizing the learnings of this period to further strengthen our operations including customer engagements, operating practices, supply chain, cost structures, working capital cycle, etc on sustained basis. We are confident of a sustained growth over the medium term," the executives said.
DCM Shriram is a diversified company with business in agri, chemicals, plastics, cement, textiles and energy services. It has two broad operational thrusts namely, the energy intensive businesses that include chloro-vinyl chain and cement and the agri-businesses that cover urea, sugar, hybrid seeds and agri-merchandised inputs.
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