DCM Shriram Expects Higher Growth After Profit Jumps 187% In January-March

White sugar is displayed in a sack (Photographer: Shirish Shete/Bloomberg)

Written by
Jayesh Khilnani
Written by

Jayesh Khilnani

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Sugar-to-fertiliser maker DCM Shriram Ltd.'s profit rose 187 percent in the three months ended March while its revenue jumped 24 percent.

The ongoing financial year would be better than the last one on the back of increase in sugarcane crushing and capacity utilisation at the company's Gujarat plant, Ajay Shriram, chairman and senior managing director of DCM Shriram told BloombergQuint.

Here are edited excerpts of that conversation.

Your revenue growth for sugar stood at 65 percent year-on-year. How much inventory is the company sitting on and what is the realisation?

Our sugar inventory at the moment is about 26 quintals with a realisation of Rs 3,000 per quintal.

What is your outlook for the sugar business?

We expect sugar crushing to do better than last year. We have crushed 415 quintals of sugarcane this year and expect to do even more.

What are your plans to ramp up utilisation at the Gujarat plant considering it is only 77 percent at the moment?

The plant is technically ready for increase in capacity utilisation but there is some stress on the chlorine front. We are working towards achieving 90 percent capacity utilisation in the next couple of months.

What are your expansion plans and how will you fund them?

We are expanding the Kota plant and expect it to be commissioned by the fourth quarter of this financial year while the expanded distillery in Uttar Pradesh will start by December 2017. The expansion is likely to attract investment of around Rs 195 crore. We expect to fund this from current cash and cash projections over the next year. The company has a cash balance of Rs 150 crore.

Do you have any debt reduction plans?

Last year, we reduced debt from Rs 1,057 crore to about Rs 928 crore. Given the capital expenditure, we do not see any debt reduction in the current year.

Assuming we have a normal monsoon, what is your guidance for the coming year?

We do not provide guidance but are working towards optimising plant operations across the board. We should be able to do better based on increase in capacity utilisation and sugarcane crushing.