Chemplast Sanmar Ltd, a leading manufacturer of chemicals and allied products, has reported a 41 per cent increase in its consolidated profit after tax (PAT) at ₹41 crore for the quarter ended June 30, 2022, as compared to ₹29 crore in the year-ago quarter.
EBITDA for the June 2022 quarter stood at ₹194 crore as compared to ₹151 crore in the year-ago quarter, an increase of 28 per cent.
The company had an exceptional charge of ₹81 crore in Q1 of this fiscal and finance cost was reduced to ₹36 crore in this June quarter as compared to ₹100 crore in Q1FY22. This is largely driven by lower debt compared to the corresponding period last year, according to a statement.
Consolidated revenue reported significant growth of 47 per cent at ₹1,411 crore (₹960 crore in Q1 of FY22). “Despite a challenging environment, we delivered another quarter with a strong 47 per cent growth in revenues on a y-o-y basis and 28 per cent growth in EBITDA on a y-o-y basis. Sequentially, however, our profits are lower than Q4 of FY22 due to the flood of PVC exports from China into India due to the Covid-related lockdowns in that country. Energy costs have also gone up, largely due to a spike in coal and natural gas prices,” said Ramkumar Shankar, Managing Director of the company.
Presently, the commodity business dominates the company’s sales pie with close to 65 per cent share. However, in terms of profitability, the specialty segment accounts for more than 50 per cent of EBITDA. “In the long term, once our proposed expansions come on stream, the speciality segment would contribute a larger share of both revenues and profitability,” he added.
PVC prices under pressure
On the pricing front, PVC prices have come under pressure as the lockdowns in China have had an impact on consumption centres whereas the production centres were unimpacted. As a result, excess PVC inventory that is being built up in China is being exported and that is keeping the prices low across the region. However, feedstock prices have also come down quite significantly following this, and indeed on a marginal basis, the spreads between PVC and VCM are still healthy. This will be realised when the prices stabilise. This flood of Chinese exports is a temporary phenomenon linked to their lockdowns, and the company is confident that things will normalise over the next couple of months.
Caustic soda prices continue to be strong. The demand environment across its product portfolio continues to remain strong. “The medium to long-term prospects for our products are positive, with demand growth estimated to outpace supply growth,” said Shankar.
August 07, 2022