DCM Shriram today reported 6 per cent decline in its consolidated net profit at Rs 218.34 crore for the first quarter of this fiscal due to losses in sugar business.
Its net profit stood at Rs 233.47 crore in the year-ago period, the company said in a regulatory filing.
Total income from operations, however, rose marginally to Rs 2,077.66 crore during April-June period of 2018-19 fiscal from Rs 2,065.03 crore in the corresponding period of the previous year.
"Margin and working capital pressures in sugar business led to PAT going down by 6.5 per cent," the company said in a statement.
The national capital-based DCM Shriram is engaged in various businesses including chloro-vinyl, sugar, fertilisers, seeds, cement and Fenesta window system.
"All our businesses have done well except sugar segment," the company's chairman and senior MD Ajay Shriram told PTI about the company's quarterly performance.
The company sold sweetener at a loss of Rs 7 per kg during the quarter, he said, adding that it is still selling sugar at a loss of Rs 2.5 per kg despite improvement in ex-mill rates. "We are currently selling sugar at Rs 32.50 per kg while our production cost is Rs 35 per kg".
DCM Shriram crushed 46 per cent more sugarcane at 611 lakh quintal and produced 44 per cent more sugar at 67 lakh quintal during the current 2017-18 marketing year (October-September).
"We have been consistently pursuing initiatives to strengthen all our businesses. The company has been continuously investing to increase volumes, enhance competitiveness and strengthen the integration," said Ajay Shriram.
These steps would improve the company's returns profile and provide continuous growth, he added.
"We have achieved full utilisation of expanded chlor-alkali capacity. The plans to further expand capacity are progressing well and will become operational in phases during October 18 to September 19," said Vikram Shriram, Vice Chairman and Managing Director, DCM Shriram.
The new power plant would be commissioned in October 2019 and this will reduce power costs," Vikram said.
"We are working to increase captive chlorine consumption - commissioning of aluminium chloride plant in Q2'19 is a step in this direction. In sugar business, we are further enhancing integration with additional power and distillery capacity to be commissioned in phases over next 18 months. This will provide stability to sugar business," he said.
DCM Shriram said it is strengthening product portfolio in bioseed, farm solutions and Fenesta business to achieve sustained growth in these businesses.
"With healthy cash generation and strong balance sheet, we will continue with our plan to strengthen our businesses and achieve earnings growth higher than the industry average," said Vikram.
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