Chemplast Sanmar has reported a net profit of ₹39 crore for the quarter ended September 2022, 75 per cent lower than ₹151 crore of the same quarter last year.
This, the company has said, is due to a chain of events. (The Chennai-based Chemplast produces PVC and a host of other chemicals, notably caustic soda and chloromethane.) The zero-Covid policies in China led to an inventory build-up in the country, as a consequence of which the Chinese dumped their products in India, mostly in the first month of the quarter. Alongside, rising energy costs due to the Russia-Ukraine war and “overall inflationary pressures” also contributed to the fall in profits.
The company’s turnover declined to ₹1,194 crore from ₹ 1,673 crore in the comparable quarter of last year, due to fall in prices of finished goods.
Prospects better
However, Chemplast Sanmar believes that things would turn for the better. In a notification to the stock exchange, Managing Director Ramkumar Shankar has observed that “both Paste PVC and Suspension PVC prices are nearing the bottom and with lower feedstock price, we expect to see an upturn from Q4-FY’23 onwards.”
Based on current trends, the company expects custom manufacturing business to grow at 30 per cent in FY23.
Recently, Chemplast signed a letter of intent with “a global innovator to supply an advanced intermediate for a recently-launched active ingredient.” Accordingly, “we plan to increase the capacity in Phase 1 itself and fast track the expansion,” Shankar has said.
The release says: “Caustic soda prices continue to remain healthy. Demand for Chloromethanes is also steady. There have been a few capacity additions recently which could have a temporary impact on prices. However, we expect the prices to recover once the market absorbs the additional quantities. Hydrogen peroxide demand increased on the back of improved demand from paper industry; the outlook remains positive with rising prices due to the tightness in the natural gas availability impacting supply in the region. Energy costs continue to remain high, with coal and natural gas prices on an upward trend. Both our capex projects are on track and slated to meet expected timelines.”