Chemplast Sanmar Q4 Results: Net Profit Declines 80% To Rs 46 Crore

Chemplast Sanmar, a leading manufacturer of chemicals and allied products and the flagship company of Sanmar group has posted an 80 per cent decline in net profit during the fourth quarter of the financial year 2022-23 to Rs 46 crore, as against Rs 232 crore during the same quarter in 2021-22.

For the entire financial year too, net profit was down by 77 per cent to Rs 152 crore compared to Rs 649 crore for the fiscal 2021-22. “Despite a challenging environment this year caused by the run-up in energy prices due to the Russia-Ukraine war, the severe impact on Chinese demand due to their zero-Covid policy for the most part of the year, and rising interest rates across the globe, we closed the year with a decent performance with a top-line of Rs. 4,941 crore and 9.5 per cent EBITDA margin.

For the full year, revenues were lower by 16 per cent as compared to the last year – however, sales volumes of almost all the products were higher on a Y-o-Y basis. Falling prices of finished goods coupled with increase in energy costs have resulted in reduction of EBITDA margin during the year,” said Ramkumar Shankar, Managing Director, Chemplast Sanmar.

During the quarter under review, revenue from operations dipped by 37 per cent to Rs 1,147 crore versus Rs 1,804 crore during the Q4 of FY22. For the entire financial year too, revenue from operations dipped by 16 per cent to Rs 4,941 crore as against Rs 5,892 crore in 2021-22. On a consolidated basis, the balance sheet continues to remain healthy with a cash and bank balance of Rs 1,192 crore and the company continues to be net cash positive.

Indian demand for Paste PVC grew by around 17 per cent in FY 23, while suspension PVC demand grew by over 30 per cent during the year. However, the slower than anticipated recovery of China's economic activity continues to have an adverse impact on the PVC industry in the form of dumping of large quantities from China into the global market, especially India. “This is expected to put pressure on PVC prices and margins in the next few quarters, till the recovery of Chinese demand. However, the medium to long term prognosis of the PVC demand still remains positive with India, in particular, expected to see a huge gap as demand continues to outpace supply,” he said.

The Other Chemicals (Caustic Soda, Chloromethanes, Hydrogen Peroxide, Ref gases) business which completes the company’s integration story, has also been impacted largely due to commissioning of new capacities in India. We expect this business to stabilize over the next few quarters, as the new capacities settle in. “Our Custom Manufacturing business has been a silver lining amidst the sluggishness witnessed by the other businesses. Growth in this business continues to be strong, with a Y-o-Y revenue growth of 26 per cent in FY ’23. We have signed LOIs for two molecules in the last nine months with a revenue potential of Rs. 800 crore over the next four years,” Shankar said.