SRF Limited, a chemical based multi-business entity engaged in the manufacturing of industrial and specialty intermediates yesterday announced its consolidated financial results for the second quarter and half year ended September 30, 2023.

The consolidated revenue of the company decreased 15% from Rs. 3,728 crore to Rs. 3,177 crore in Q2FY24 when compared with Corresponding Period Last Year (CPLY). The company's Earnings before Interest and Tax (EBIT) decreased 23% from Rs. 689 crore to Rs. 533 crore in Q2FY24 when compared with CPLY. The company's Profit after Tax (PAT) decreased 37% from Rs. 481 crore to Rs. 301 crore in Q2FY24 when compared with CPLY.

Commenting on the results, Ashish Bharat Ram, Chairman and Managing Director, SRF Ltd., said, "During the quarter, we felt the brunt of the destocking and inventory rationalization phenomenon in our Chemicals Business. Having said that, we are now beginning to see some positive traction that should bode well for a better second half of FY24. The overcapacity in our Packaging Films Business will continue for some more time."

Consolidated Q2FY24 Segment Results

The Chemicals Business reported a decrease of 22% in its segment revenue from Rs. 1,830 crore to Rs. 1,426 crore during Q2FY24 over CPLY. The operating profit of the Chemicals Business decreased 33% from Rs. 517 crore to Rs. 348 crore in Q2FY24 over CPLY.

During the quarter, the Specialty Chemicals Business witnessed weak global demand owing to the ongoing inventory rationalization by certain key customers. The performance of the Fluorochemicals Business was adversely impacted due to low demand for refrigerants and resultant pressure on margins. In addition, sluggish growth in the pharmaceuticals and agrochemical industries adversely impacted the demand for some industrial chemicals.

The Packaging Films Business reported a decrease of 16% in its segment revenue from Rs. 1,331 crore to Rs. 1,122 crore during Q2FY24 when compared with CPLY. The operating profit of the Packaging Films Business declined 24% from Rs. 101 crore to Rs. 77 crore in Q2FY24 over CPLY. During the quarter, the Packaging Films Business faced headwinds on account of substantial supply addition in both BOPET and BOPP film segments, resulting in significant pressure on margins and an overall demand slowdown globally.

The Technical Textiles Business reported an increase of 9% in its segment revenue from Rs. 466 crore to Rs. 506 crore during Q2FY24 over CPLY. The operating profit of the Technical Textiles Business increased 19% from Rs. 63 crore to Rs. 75 crore in Q2FY24 over CPLY. During the quarter, the Technical Textiles Business performed well owing to higher sales volume of its flagship Nylon Tyre Cord Fabric. Additionally, the Business witnessed healthy demand for its Belting Fabrics and Polyester Yarn segments due to increased infrastructural spending by the Government.

The Other Businesses reported an increase of 27% in its segment revenue from Rs. 100 crore to Rs. 127 crore in Q2FY24 when compared with CPLY. The operating profit of the Other Businesses increased 313% from Rs. 8 crore to Rs. 33 crore in Q2FY24 over CPLY. During the quarter, the Coated Fabrics segment performed well because of strong domestic sales driven by healthy demand for its products. The Laminated Fabrics segment also performed in line with the expectations. 

H1 FY24 Financials

In the first six months of FY24, SRF's revenue decreased 15% from Rs. 7,622 crore to Rs. 6,516 crore over CPLY. The company's PAT decreased 39% from Rs. 1,089 crore to Rs. 660 crore over CPLY. 

Capex

The Board has approved a project for setting up a manufacturing facility for Capacitor Grade BOPP Film at Indore, India at a projected cost of Rs. 275 crore.

The Board has also approved a project for setting up a new and dedicated facility to produce an agrochemical intermediate at Dahej, India at a projected cost of Rs. 235 crore to meet the growing demand for the product in the future.

Innovation and Intellectual Property

As of September 30, 2023, the company has applied for a total of four hundred and twenty-one patents. Till date, the company has been granted one hundred and forty-two patents globally.