SRF steps up investments to improve overall performance

SRF-Ashish-pic
Mr. Ashish Bharat Ram, Director, SRF

SRF Ltd., engaged in the manufacture of chemical based industrial intermediates, has reported an increase of eight per cent in its net sales at Rs. 884 crores for the last quarter of 2013-14 over the corresponding period last year (CPLY). Impacted by the discontinuation of income from CERs, the company’s net profit after tax declined by 26 per cent from Rs. 72 crores reported a year ago to Rs. 53 crores during January-March 2014.

While the segment revenue from the Technical Textiles business increased by 16 per cent from Rs. 410 crores to Rs. 475 crores during January-March 2014 over CPLY, its operating profit grew from Rs. 20 crores to Rs. 44 crores, thanks to favourable market conditions. Similarly, the Packaging Films business reported around 14 per cent increase in its segment revenue at Rs. 166 crores leading to a QoQ turnaround from an operating loss of Rs. 2 crores to an operating profit of Rs. 5 crores during the period. The Chemicals & Polymers business revenue declined by six per cent at Rs. 248 crores with 60 per cent drop in operating profit at Rs. 34 crores during the fourth quarter of 2013-14 even though there was no income from CERs.

Reflecting on the results, Mr. Ashish Bharat Ram, SRF Managing Director, said: “The company has performed well in a difficult economic scenario. Major investments have been commissioned recently which should provide positive impetus going forward.”

For the fiscal ended March 31, 2014, the company reported six per cent growth in its consolidated net sales at Rs. 3,993 crores as against Rs. 3,769 crores recorded the previous year. The consolidated net profit declined by 36 per cent, from Rs. 253 crores to Rs. 162 crores after absorbing higher depreciation and interest costs from the two new plants commissioned overseas and the absence of income from sale of CERs following changes in the European Union – Emission Trading Scheme (EU-ETS).

The net debt to equity ratio for SRF Ltd. increased from 0.43 as on March 31, 2013, to 0.55 times as on March 31, 2014, and the earning per share (EPS) of the company declined from the previous year’s Rs. 45.02 to Rs. 37.71.

The Board has approved a capex proposal for setting up a second multi-purpose plant to create additional capacity to manufacture specialty chemicals at a total investment of Rs. 140 crores at the company’s chemical complex at Dahej in Gujarat. When completed, the project will enable the company to cater to the increasing demand for specialty chemicals.

As part of its ongoing capex programme, SRF commissioned 10 projects worth more than Rs. 650 crores during the year.

In October 2013 and in February 2014, the SRF Board had approved two interim dividends of 30 per cent and 70 per cent respectively, aggregating a total of Rs. 10 per share. However, the Board did not recommend any final dividend for 2013-14.