DCM Shriram Ltd. announces its Q1 FY ’17 financial results

 Q1 F Y ‘ 17 Net Revenue at Rs. 1,442 crores (LY: Rs 1,789 cr)

 Q1 F Y ‘ 17 PBDIT up 29% YoY to Rs. 250 cr

Q1 FY ‘ 17 Net Profit at Rs. 167 cr, up 34% YoY
DCM Shriram Ltd. announces its Q1 FY ’17 financial results

 Chloro-vinyl and Sugar business – major contributors to profit growth

 Agri-Inputs businesses continue to be under stress due to adverse weather conditions and tight financial position of farmers

 Rs. 725 crores capacity expansion plan in Chemicals and Sugar (Co-generation) business to be fully commissioned in Q3 FY 17

 Board  has  approved  another  capacity expansion  for  Chlor-Alkali  (including  liquid  &
flakes) at Kota complex with an investment of Rs. 97.3 crores

New Delhi, 9th Aug 2016: DCM Shriram Ltd. announced its Q1 FY17 financial results today.

FY’17 Highlights



Net revenue
Finance Cost

Key Developments and Outlook – Q1 FY 17

1.   Net Revenues lower at Rs 1,442 crores vs. Rs 1,789 crores last year due to suspension of trading in DAP/MOP fertilizers. Lower volumes of hybrid seeds (primarily BT cotton) also contributed to decline in revenue

2.   PBIT stood higher at Rs 226 crores, up 34% YoY (LY: Rs 168 crores)

a.   Chloro-Vinyl businesses’ earnings improved to Rs 121 crores, up 29% from Rs 94 crores in Q1
FY 16. This increase in earnings was on account of lower costs of key input materials, better efficiencies and higher realizations

b.   Sugar Business’ earnings improved to Rs. 32 crore from –ve Rs. 16 crore LY led by better prices and lower cost of production, a result of better recoveries in Sugar Season 2015-16.

4.   Finance costs at Rs 20 crores was down by 27% YoY from Rs 27 crores in Q1 FY 16 led by lower borrowing costs

5.   PAT up by 34% YoY to Rs 167 crores. EPS for the quarter at Rs 10.3 up from Rs 7.7 in Q1 FY 16

6.   Net Debt as on June 30, 2016 stood at Rs. 1,071 crores vs. Rs 690 crores as on June 30, 2015.
Increase in net debt was on account of the ongoing expansion projects

7.   Expansion Projects –

The Chemicals project to increase the capacity from 780 TPD to 1285 TPD was partially commissioned  in  June  at  Bharuch.  Full  commissioning  including  power  expansion expected to be completed up by Oct 2016.
Sugar Co-gen expansion is progressing as per plan with completion expected by Q3 2017
Board has approved expansion in Chemicals business at Kota complex to increase Chlor- Alkali capacity (including liquid & flakes) at an estimated investment of Rs 97.3 crores. Completion expected by Q3 FY18

Commenting on the performance for the quarter, in a joint statement, Mr. Ajay Shriram, Chairman
& Senior Managing Director, and Mr. Vikram Shriram, Vice Chairman & Managing Director, said:

“The company delivered a healthy performance during Q1. All businesses, except Farm Solutions and Bioseed, recorded better performance.

Chloro Vinyl businesses’ continue to deliver improved performance as a consequence of our efforts to strengthen cost competitiveness and grow volumes. Lower input prices also contributed to better performance. Our position will further improve post completion of ongoing capacity expansion and efficiency improvement projects in the Chlor-Alkali business. We have taken up a project to further enhance Chlor-Alkali capacity (liquid & flakes) at Kota at an investment of Rs 97 crores. This would be operational in Q3 ‘ 18 and will provide further growth to this business.

Sugar business’ earnings recovered vis-à-vis last year driven by improvement in the margins. We are investing on value addition to the by-products and to increase cane availability to further strengthen this business.

Farm Solutions and Bioseed businesses were adversely impacted due to delay in onset of monsoons, weak farmer economics and tight funds availability.

The Company is confident of delivering healthy growth in the medium term led by expanded capacity and improved cost structure in the Chemicals business, higher returns from value addition to Sugar by- products and targeted growth in the Bioseed and Farm Solutions businesses. Our healthy cash flows and comfortable gearing enable us to undertake growth investments going forward.”

Q1 FY ’17 Performance Overview & Outlook


Q1 FY17 revenue up by 4% YoY due to higher product prices and marginally higher volumes in
Chemicals as well as in Vinyl business
Earnings were up by 29% YoY due to higher margins
o Variable costs stood lower driven by lower input prices as well as improved power efficiency
o Product prices improved YoY. Sequentially PVC prices were up by 8% and chemical prices were down by about 3%
Capital employed stood higher on account of ongoing Capital expenditure in Chemicals business

Board approved an expansion project in the Chemicals business at the Kota plant at an estimated investment of Rs 97.3 crores. Commissioning expected by Q3 FY 18
Expansion of Caustic soda capacity was partially (420 TPD) commissioned in June ‘16 and balance
along-with additional captive power capacity expected to be commissioned by Sep / Oct 2016.
The capacity added in June ‘16 is operating at partial load pending commissioning of Power plant.
Cost structure in Chemicals will further improve after completion of expansion project and technology up-gradation of existing facility
Caustic as well as PVC prices linked to global price trends, which is presently stable

Q1 FY 17 revenue down by 15% YoY due to lower sales volumes vis-à-vis Q1 FY 16; higher realizations moderated the decline in revenue during the quarter.
Business’ earnings turned positive due to better sugar margins, which was primarily due to higher
prices and lower cost of production, a result of better recoveries in Sugar Season 2015-16.
o Earnings during the quarter were adversely impacted by increase in quota on molasses for country liquor to 25% from earlier 15%
Capital employed higher vs. Q1 FY 16 due to higher closing stock of sugar and lower cane dues

Rational Central and State Govt. policies are to be sustained, to ensure long term viability of the sector
Sugar co-gen expansion project is on schedule, to be commissioned by Q3 FY2017


Q1 FY 17 revenue declined primarily due to suspension of DAP/MOP fertiliser trading by the company
‘Value Added’ segment’s revenue stood lower by 20% vis-à-vis last year
o Decline in revenue was on account of  lower volumes of BT Cotton seeds led by substantial decline in acreage in key markets. Capping of  BT Cotton selling price under Seed Price Control Order of  the Central Govt. also impacted revenue during the quarter
o Delay in monsoon and   weak   agrarian economy, after two years of   weak monsoon also impacted volumes
Business’ earnings were impacted due to drop in volumes and margins

Company’s  focused  marketing  initiatives,  product  portfolio  expansion  and  efforts  aimed  at geographic expansion to drive growth for the ‘Value Added’ vertical in the medium term
Subsidy outstandings, that tend to build up in the second half of financial year, remain an area of concern, although these will be lower in the current year due to lower trading in bulk fertilizer


Domestic business’ first quarter revenue declined mainly due to lower volumes of BT cotton seeds
o This was driven by decline in cotton acreages in key markets, with north India witnessing the highest decline
o Cotton Seed Price Control Order that capped selling price of BT cotton seeds also impacted revenue during the quarter
Earnings lower primarily due to lower volumes of BT cotton seeds. Margins have been stable
International businesses – Volumes in Philippines improved. However in Vietnam and Indonesia there has been a delay in season due to adverse climate

Industry facing adversities relating to weather and regulatory framework. We are working on expanding our crop portfolio and product offerings, which would provide stability over medium term


Urea production up 23% YoY as last year the business undertook a maintenance shutdown
Revenue  stood  higher  by  9%  due  to  higher  sales  volumes,  a  result  of  higher  production.
Realizations stood down vis-à-vis last year due to decline in feedstock prices
Earnings improved due to higher volumes, better energy efficiencies and one time impact of FICC

Company is undertaking measures to further improve energy efficiency
Subsidy outstandings, that tend to build up in the second half of financial year, remain an area of concern
Inadequate   reimbursement   of   conversion   costs   continues   to   adversely   impact   business’


Fenesta Windows Systems

Fenesta business’ revenue stood up by 23% YoY driven by higher volumes during the quarter
o Volumes in ‘Retail’ and ‘Projects’ segment up by 15% and 43%, respectively, vs. Q1 last year
o Retail segment’s contribution to revenue stood at 73% vs. 77% in Q1 last year
Overall order booking up by 15% YoY driven by the 32% YoY increase in ‘Retail’ segment’s order
Business’ earnings up by 18% YoY due to higher revenue during the quarter

Revenue stood up by 62% YoY on account of higher volumes and 15% increase in realizations vis- à-vis last year
Business reported positive earnings as compared with loss last year led by higher realisations and lower input costs

Revenues are from fuel sales only.
Sale of existing land parcels proceeding slowly. Expected to take about 2-3 years

Q1 FY  ‘17 – Segment Performance