DCM Shriram Ltd

The company posted a flat set of numbers for Q4FY14, with net revenue for the quarter coming in at Rs.1479 crore, up 4% (YoY) and net profit came in at Rs.83 crore compared to Rs.82 crore in previous Q4.  Its chloro-vinyl segment continues to do well and sugar profits rose smartly from Rs.12 crore to Rs.50 crore but this gap was mainly on account of inventory loss of Rs.63 crore which it suffered last Q4 on account of sugar price dipping below costs. Its Farm Solutions business grew 87% while Bioseed showed a loss of Rs.29 crore due to write off of old & expired inventory in International operations.  Its interest cost came down during the quarter from Rs.36 crore to Rs.28 crore.

For FY14, Farm Solutions business was the key driver, growing 37%, pushing up revenue by 12% to Rs.6182 crore. Sugar grew 11% but in terms of EBDIT, it was sugar which dented the profit as sugar margins declined from positive Rs.196 per quintal to negative Rs. (234) per quintal.  Cement business too showed a loss. It ended the year with a net profit at Rs.242 crore, up 19%. Total dividend declared in FY14 was at 100%.

Looking ahead, fertilizer business will have a planned maintenance shutdown in FY15 and earning are exoected to remain under pressure until the Government further revises the retention prices to compensate for cost increases, and improves subsidy payment position. Farm Solutions is expected to do better but impact of El Nino could be negative. Bioseed has a buoyant medium and long term outlook while sugar, though prices remain subdued currently, might pick up if production goes down.