Chemplast Sanmar has reported a significant decline in its profit after tax for the March 2023 quarter and for the full year FY23 due to the impact of surge in imports from China and the increase in power and fuel costs.
For the quarter ended March 31, 2023, the Chennai-based company’s PAT fell 80 per cent to ₹46 crore compared with ₹232 crore in the year-ago period.
Its EBITDA was lower by 72 per cent at ₹97 crore compared with ₹346 crore. Revenue also declined by 37 per cent to ₹1,147 crore ( ₹1,807 crore).
For the FY23, the company’s PAT declined by 77 per cent to ₹152 crore ( ₹649 crore).
Its EBITDA dropped by 61 per cent to ₹468 crore. Revenue stood at ₹4,941 crore against ₹5,892 crore — a decline of 16 per cent, according to a statement.
Power and fuel costs increased by ₹193 crore and by ₹23 crore compared with FY22 and Q4 of FY22, respectively. This is mainly due to increases in coal, gas, and superior kerosene prices.
“Falling prices of finished goods coupled with an increase in energy costs have resulted in a reduction of EBITDA margin during the year, said Ramkumar Shankar, Managing Director, Chemplast Sanmar Ltd.
Indian demand for Paste PVC grew by around 17 per cent in FY23, while Suspension PVC demand grew by over 30 per cent during the year.
Chinese imports
“However, the slower-than-anticipated recovery of China’s economic activity continues to hurt the PVC industry in the form of dumping of large quantities from China into the global market, especially India. This is expected to put pressure on PVC prices and margins in the next few quarters, till the recovery of Chinese demand,” he explained.
The other chemicals (caustic soda, chloromethanes, hydrogen peroxide, ref gases) business which completes our integration story, has also been impacted largely due to the commissioning of new capacities in India. “We expect this business to stabilise over the next few quarters, as the new capacities settle in,” he said.
However, its Custom Manufacturing business provided some respite amid the sluggishness witnessed in its other businesses. This business’s revenue grew 26 per cent in FY23. “We have signed LOIs for two molecules in the last nine months with a revenue potential of about ₹800 crore over the next four years. Based on these LOIs, and the strong pipeline of products, we have a high level of visibility with respect to steady-state capacity utilisation of the first phase of expansion that is to be commissioned in H1 FY‘24,” said Shankar.