Companies

We did reasonably well in first quarter: Ajay Shriram of DCM Shriram

TV Jayan New Delhi | Updated on July 21, 2021

Ajay Shriram, Chairman and Senior Managing Director, DCM Shriram (file pic)   -  Ramesh Sharma

Lifting of Covid lockdown, appreciating global chemical prices helped company post 128% increase in net profits

Appreciating international prices of certain chemicals such as caustic soda chlorine and PVC (polyvinyl chloride) as well as demand for its Fenesta brand of doors and windows from construction sector helped the listed conglomerate DCM Shriram to do well in the first quarter ending June 30. As a result, the Delhi-based group posted a handsome 128 per cent increase in its net profits.

DCM’s net profits shot up to ₹158 crore in Q1FY22, even though there was only a marginal increase in quarterly revenues, which grew by only 2 per cent to ₹1,957 crore.

The quarter, which saw the firm retire much of its debt (₹122 crore on June 30 as compared to ₹1,167 crore in the corresponding period last year), also witnessed its credit rating improving a notch higher to AA+.

DCM Shriram plans ₹1,070-cr investment

“Even though the second wave of the pandemic led to certain disruptions, the firm’s financials are quite robust and the performance quite satisfactory. In groups like ours, some businesses move faster and some not so fast. So, this quarter has been quite okay,” its Chairman and Senior Managing Director, Ajay Shriram, told BusinessLine.

“Though the second wave was very acute in April and May with high number of cases, the government managed the second wave better as compared to the previous one. The authorities moderated the economic activity, but did not stop it completely. This was a wise step,” he said.

DCM Shriram net jumps to ₹158 crore in Q1

He said both chloro-vinyl business and plastic business of the company were good this year as compared to the same quarter last year. “In the first quarter of FY21, the chemical business was badly impacted because of the lockdown. We had to close down all our processing plants — chemicals, plastic as well as fertiliser — which in our memory was for the first time. This year, on the other hand, the plants were running fully and there is good support from the market as there is demand. In caustic soda-chlorine business, the market situation and the demand were better than last year. Besides, the prices were good,” Shriram said.

Sugar performance lacklustre

Ajit Shriram, Joint Managing Director of DCM Shriram, acknowledged, however, that the firm’s performance in the sugar sector was lacklustre as compared to the same period last year. According to him, this was because of three reasons. First, there was a 0.2 per cent drop in recovery of sugar this year as compared to last season because of infestation and adverse weather conditions.

Besides that, sugar mills were crushing for an extra month last year as gur and khandsari units were closed down due to the lockdown. Similarly, sugar production was also higher last year same quarter because of lower diversion to make ethanol. As compared to a diversion of 7 lakh bags of sugar this year, only 4.5 lakh bags of sugar were diverted to produce ethanol last year, he said.

Keeping the government’s increasing focus on fuel-blending in mind, DCM Shriram would be investing in yet another ethanol producing plant. Its Board met on Wednesday and approved setting up of 120 kilolitres per day (KPD) ethanol plant at a cost of ₹145 crore at DCM Shriram’s Ajbapur sugar mill in Uttar Pradesh.

This ethanol plant will be state-of-the-art and will be able to use multiple types of feedstock such as maize and broken grains apart from B-heavy molasses and cane juice, Ajit Shriram said. The plant is expected to be commissioned by the second quarter of the next financial year and would make DCM Shriram a key player in ethanol business. The firm already has two distilleries with combined capacity of 420 KPD.

Published on July 21, 2021

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