Capacity expansion and better efficiencies in its chemicals and fertiliser businesses helped DCM Shriram offset the losses on account of falling sugar prices, DCM Shriram Chairman and Senior Managing Director Ajay S Shriram said on Tuesday.
“Our first quarter FY19 PAT was ₹218 crore, despite our sugar business suffering a loss of ₹160 crore. Our other businesses have done well, our expansions moved at the right time and efficiencies and uptimes of the plants are good. This helped us compensate for the loss in the sugar sector,” Shriram told BusinessLine. The company’s PAT in the first quarter of the current fiscal stood at ₹218 crore, 6.5 per cent lower than the ₹233 crore posted in the corresponding previous period. The revenues in the first quarter, on the other hand, were up 6.3 per cent at ₹2,068 crore.
Ethanol plant
Its revenues from the sugar business were ₹529 crore, nearly 12 per cent lower than ₹600 crore in the first quarter of FY18. However, an impressive 106 per cent growth in power production and commissioning of its 150 kilolitre per day (KLD) ethanol plant in April this year partly offset the losses from the sugar business. In this sugar season, the mills owned by the company crushed 611 lakh quintals of cane. Next season, they expect to crush over 700 lakh quintals, he said.
“We are expanding our Hariawan plant in Uttar Pradesh by 5,000 tonnes per day, which will be commissioned by October this year. “This will provide us adequate molasses to run our ethanol plants,” Shriram said.
The DCM board approved the setting up of a new 200 KLD ethanol plant, which would come up in the next fiscal year.
While its fertiliser business is running smoothly, the changes brought in by the government in disbursing subsidies have affected the cash flow of the company, Shriram said. The reimbursement of subsidy is now linked to the sale at the retailer’s end, rather than on the dispatch from the factory. As the sales are restricted to kharif and rabi cropping seasons, the stocks of fertilisers have piled up in the factory, hitting the cash flow situation, he said.
In fertilisers, the company registered a 36 per cent growth in revenues to ₹228 crore in the first quarter as compared to that in the corresponding period last year.
On the chemicals business front, DCM has done well, with revenues going up 38 per cent in first quarter. Shriram, however, expressed concern over the government’s decision not to allow the sale of next generation transgenic cotton seeds, saying that the decision would hit farmers.
In the bioseeds segment, the company’s revenues were down 8 per cent YoY mainly due to government reducing the selling price of Bt cotton seeds to ₹740 per packet from ₹800 earlier.