SRF posts 7% fall in profit on packaging margin hit in Jan-Mar quater

Indian chemicals and polymers maker SRF Ltd on Tuesday reported a 7.3% fall in fourth-quarter profit, hit by significant pressure on the margins of its packaging film business.
 

Consolidated net profit after tax stood at 5.62 billion rupees ($68.7 million) for the three months ended March 31, compared with 6.06 billion rupees a year earlier, the Gurugram-based company said in an exchange filing.

Cost of materials consumed rose 8.8%.
 

A spike in the prices of polypropylene and polyethylene films used in packaging film pulled the segment's revenue down 17%. The business faced "strong headwinds with significant pressure on margins" after several new lines got operationalized in India and overseas, the company said.
 

Revenue from sale of products rose 6% to 37.19 billion rupees.
 

Meanwhile, weak demand crimped sales in the technical textiles segment, which provides reinforcements to nylon and polyester yarns and fabrics. The segment reported a more than 13% fall in revenue due to lower sales of nylon tyre cord fabrics, SRF said.

WHY IT MATTERS
 

Slowing demand and macroeconomic headwinds pose major challenges to chemicals companies, which are already contending with rising raw materials costs and shrinking product prices.
 

SRF's revenue grew 2-44% in the last four quarters, while profit climbed between 1% and 59%. Revenue from the chemicals segment, which accounts for more than half of the overall business, grew about 34% to 21.02 billion rupees.

(Reporting by Ashna Teresa Britto; Editing by Dhanya Ann Thoppil)