Rashtriya Chemicals Q1 net plunges on higher costs

MUMBAI: Rashtriya Chemicals & Fertilisers' quarterly net profit plunged 80 percent as costly natural gas and raw material prices hit profitability at its manufacturing unit in Mumbai pushing its shares down over 5 percent.

The state-run company on Wednesday reported a net profit of 39.6 million rupees for April-June on net sales of 8.68 billion rupees.

"We have been operating on costly gas sourced from private companies at the Trombay unit," Gautam Sen, director, finance, said,"Also, prices of raw materials like rock phosphate and muriate of potash has substantially gone up, which has eventually affected our profitability."

Rashtriya Chemicals' Trombay unit, which accounts for about 45 percent of production, reported a net income of 55.2 million rupees in April-June compared to 278 million rupees last year, it said in a statement.

The Trombay unit was shut down for a short period during the quarter following technical issues, which also affected performance, Sen added.

The company's other manufacturing facility at Thal outside Mumbai doubled its quarterly net income to 39.8 million rupees. "Although the consumption of raw material seems to be the key factor, we are not sure, why has it affected the Trombay unit and not the other one," Tarun Surana, analyst at Sunidhi Securities and Finance said.

The company's raw material costs rose 16.63 percent in April-June to 5.68 billion rupees on year, it said.

Shares of Rashtriya Chemicals & Fertilisers, which have lost more than 7 percent in the last three months, closed at 75.55 rupees on Wednesday, down 3.64 rupees in a weak Mumbai market.