Mangalore Chemicals Q2 net slumps 83% to Rs 9 cr

Operating profit in the quarter almost halved to Rs 41 crore

Mangalore Chemicals and Fertilizers (MCF) posted a second-quarter profit that plunged 83% on a galloping expenses that obliterated a significant rise in revenue.

For the second quarter, the Vijay Mallya-led UB Group firm posted a net profit of Rs 9.43 crore from Rs 56.42 crore in the same quarter last year. The massive decline in profit came despite an increase of 45%  in the quarter’s revenue to Rs 1221 crore, from Rs 839 crore in the corresponding quarter last year.

Operating profit in the quarter almost halved to Rs 40.82 crore from Rs 79.92 crore in the same period last year, for the company that has been seeing interest from rival firms Deepak Fertilizers and Petrochemicals Corp and Zuari Fertilizers and Chemicals.

Total expenses in quarter jumped 55%, as the cost of purchase of goods kept in hand showed a more than a two-fold increase to Rs 421 crore in the quarter from Rs 166 crore in the same quarter last year. Inventory costs also rose to Rs 45.11 crore during the quarter from the Rs 22 crores saved in inventory costs in the same period last year

MCF, the only manufacturer of chemical fertilizers in the state of Karnataka, has seen aggressive share trading activity in the market earlier this year with the two firms trying to outdo each other in gaining a larger share of the Vijay Mallya-led company.

Regulatory filings show Zuari owns 16.43% in the company as on September 30 from 9.73% at the end of the first quarter, while Deepak Fertilizers’ wholly owned subsidiary SCM Soilfert picked up a 24.46% stake by the end of the second quarter, a tad short of the 25% that would automatically trigger an open offer in the market.

Chairman Vijay Mallya and his group companies still hold a 21.98% stake in the firm and have pledged 52.8% of the total holding. However, in August, Mallya made it clear he intends to keep control of the firm.

Shares of the company dropped 2% to Rs 54.90 apiece Friday on the Bombay Stock Exchange.