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A sharp swing in the sugar business due to a drop in realisations has hit the second quarter profit of DCM Shriram Consolidated Ltd (DSCL), offsetting growth in other segments, such as farm solutions and chloro-vinyl.
“The overall performance for the quarter has been significantly affected due to losses in the sugar business,” said Ajay Shriram, Chairman. Sugar profits have swung from a positive Rs 31.3 crore to negative Rs 24.7 crore.
“The operating environment for sugar in Uttar Pradesh is very challenging with the State Government fixing very high cane prices without any linkage with sugar prices. This has resulted in a high cost structure, making the industry uncompetitive in the State vis-à-vis other States and imports,” Shriram added.
The DSCL scrip ended marginally lower at Rs 64.90 on the BSE.
The agri-input business driven by the Shriram Farm Solutions business grew 59.3 per cent on good monsoons, while the chloro-vinyl business also saw a growth of 5.9 per cent during the quarter.
“We maintain our view that our business model is strong and efficient and we will deliver noticeably better results, particularly if the sugar operating structure improves,” Shriram said.
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