Chemplast Sanmar Ltd plans to invest about ₹160 crore in capacity expansion to support the custom manufactured chemicals business as the Chennai-headquartered company has returned to profitability in this June quarter, recording a net profit of ₹24 crore.
The growth came on the back of a revival in PVC prices. It posted a net loss of ₹64 crore in the June 2023 quarter. “We witnessed a positive swing in profits in the current year on account of improved prices of PVC and lower feedstock prices,” said Ramkumar Shankar, Managing Director of the company.
The company’s revenue from operations grew 15 per cent at ₹1,145 crore when compared with ₹996 crore in the year-ago period. It posted an EBITDA of ₹124 crore and a 11% margin in Q1FY25.
The rise in PVC prices was mainly due to a severe container shortage for cargo from China. However, these elevated freight rates began to decline after the quarter ended. Combined with continued weakness in the Chinese economy and large volumes of low-priced imports from China, PVC prices dropped in July.
In Q1Fy25, speciality chemicals grew by 61% on Y-o-Y, supported by higher volumes of speciality paste PVC from the newly commissioned facility at Cuddalore and the increased revenue from the Custom manufactured Chemicals Division.
Value-added chemicals’ revenue grew by 20% due to higher volumes of caustic soda. Suspension PVC revenue has been stable in Q1FY 25 as compared to the year-ago period, while it has improved by 8% sequentially.
Shankar said the Board approved ₹160 crore towards capacity expansion at Berigai to support the growth of the custom manufactured chemicals division. Along with our recent commissioning of state-of-the-art R&D, pilot and production blocks, this new investment is a reflection of our strong product pipeline and the pace at which we commercialise new products, he noted.