DSCL net profit down by 95% owning to loss in sugar business

NEW DELHI: DCM Shriram Consolidated ( DSCL) second-quarter profit plunged by almost 95%, as its core sugar production business continued to take hits due to the lack of government clarity in cane pricing policy and high raw material costs.

The overall net profit for Q2FY14 is Rs 1.4 Crore, as compared to Rs 28.9 crore in the year-ago period. Net revenue for the quarter ended September 30th was at Rs 1,689.9 crore, up by a fourth compared to a year ago.

Cane pricing in India is still a state subject and is usually very high owning to pressure from local cane growers Currently, there is no regulatory regime that links the price of cane with the market price of sugar and its by-products.

The cost of cane in UP is highest at Rs 280 per quintal, where the mills of DCL are based. While the sugar prices have been on a decline due to huge stock surplus in the market. The current ex-mill price of sugar in UP is Rs 29.5 per kg.

DSCL’s Chloro-Vinyl’ and ‘ Shriram Farm Solutions’, witnessed profit growth of 16.2% and 90.6% respectively over last year same period. While its Bio-seed business saw a revenue growth of 12% in first half of the financial year.