Chemplast Sanmar posts Q4 FY24 loss at Rs. 31 Cr
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Chemplast Sanmar posts Q4 FY24 loss at Rs. 31 Cr

The year was marked with challenges on all fronts including pricing and margin pressures due to excessive dumping of PVC resins by China and other countries

  • By ICN Bureau | May 21, 2024

Chemplast Sanmar Limited announced its consolidated Financial Results for the quarter and year ended March 31, 2024.

During Q4 FY24, Chemplast Sanmar has posted net loss of Rs. 31 crore as compared to net profit of Rs. 46 crore in Q4 FY23. Revenue from operations in Q4 FY24 was Rs. 1,051 crore as compared to Rs. 1,147 crore during the corresponding period in FY23. In Q4 FY24, EBITDA dropped 78% to Rs. 21 crore as compared to Rs. 97 crore.

For the Financial Year ended March 31, 2024, Chemplast Sanmar has posted a loss of Rs. 158 crore as compared to profit of Rs. 152 crore. Revenue from operations during FY 24 also dropped to Rs. 3,923 crore as compared to Rs. 4,941 crore in FY23.

Commenting on the results, Ramkumar Shankar, Managing Director, said, “From a financial performance perspective, FY ‘24 has been one of the toughest years for the company in recent times. The year was marked with challenges on all fronts including pricing and margin pressures due to excessive dumping of PVC resins by China and other countries, sharp correction in prices of Caustic Soda and Chloromethanes due to the over-supply situation in the country and slow-down in the agrochemicals sector resulting in deferment of supplies by the CMC division. Amidst these headwinds, we closed FY ‘24 with a topline of Rs. 3,923 crores and an EBITDA of Rs. 26 crores.

“There are, however, a number of positive factors which bode well for the future – these include the continuing strong demand outlook for PVC resins resulting from a boom in real estate and infrastructure sectors, issue of a Quality Control Order on PVC resin and the significant progress in the investigation for imposition of ADD on PVC imports. Collectively, these are likely to lead to a correction in PVC prices over the next 2-3 quarters. The Other Chemicals# business is likely to stabilize over the next 3-4 quarters. CMC division is also expected to see the positive impact of the new products in the upcoming quarters.

“During this difficult period, the Company has been resilient and focused on setting up capacities and capabilities which are likely to bear fruit once the overall scenario improves. We added 41kt of Paste PVC capacity during the quarter. This capacity is aimed at fulfilling domestic demand via import substitution and is expected to be ramped up by Q2-FY ‘25. This additional capacity further strengthens our leadership position in Paste PVC in India. Further, construction of Phase 2 of the CMC expansion project is underway, and we expect to complete this by the end of Q1-FY ’25. With the recent signing of the 4th LoI, the CMC division continues to make significant strides in growing the business.

The pipeline of the CMC division continues to be robust. While the short-term challenges persist, we have laid the foundation to capitalise on the long-term prospects of each of our businesses and are confident of delivering a stronger performance in the future.”

Key Highlights

• Prices of both Suspension PVC and Paste PVC were lower by 19% and 12% respectively in FY ’24 as compared to FY ‘23. Some signs of revival were however witnessed on a q-o-q basis with a marginal increase in prices

• Chloromethanes and Caustic Soda prices in FY ’24 have been the lowest over the last three years; these witnessed further correction on a q-o-q basis

• Feedstock (VCM and EDC) prices have tracked PVC prices directionally in FY ’24

• Custom Manufactured Chemicals (CMC) business was adversely impacted during the year by the overall slowdown in the global agrochemicals industry. The impact was partly offset by commencement of supplies of new products under the first two LoIs signed in the last 12-15 months. As a result, CMC division’s revenues were lower by ~13% compared to the last fiscal. The positive impact of the new products will be seen in the upcoming quarters

• CMC division signed the 4th LoI with an agrochemical innovator for an advanced intermediate for a new Active Ingredient (‘AI’)

Projects Update

• 41 kt Paste PVC expansion project was commissioned in Q4-FY ’24

• CMC Phase 2 expansion project is on track for completion in Q1-FY ’25

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