EBITDA margins contracted due to forex fluctuations: RCF

In an exclusive interview to CNBC-TV18, RG Rajan, chairman and managing director of the company said that the trading loss was due to foreign exchange fluctuations. “We had to make some provisions for foreign exchange loss of around Rs 83 crore in total,’ he explained. Going forward, he hopes that those losses can be written back because the rupee has been strengthening.

For the quarter in review, RCF’s Trombay plant performed much better than its Thal plant, and Rajan attributes this to better margins and performance of chemical fertilizers.

Going ahead, RCF expects Q4 numbers to improve due to improved performance at That and rupee appreciation. “We will end this financial year with profits 5-10% highersthan last year,” he said.

Below is an edited transcript of his interview with Ekta Batra and Latha Venkatesh. Also watch the accompanying video.

Q: Can you take us through the volumes and realizations this quarter for the company?

A: Turnover for the quarter is Rs 1,595 crore compared to Rs 1,533 crore last year. Profit is around Rs 80.5 crore as compared to Rs 95.2 crore the previous year.

Q: This time around it seems like the Trombay plant in terms of revenue growth as well as the EBITDA margin has performed better than Thal plant. What has actually led to this revenue growth and this margin uptick and do you think that it can it be sustained at all?

A: The Trombay plant has performed well mainly due to the much better margins in PE and PK fertilizers and also due to better performance of industrial chemicals. The Thal plant performance has not been so good in this quarter mainly because we had a shutdown for about one and a half months in one train for the revamp of the unit.

Q: Do you think this performance can be sustained?

A: Thal performance will definitely improve in the last quarter and the performance of Trombay will continue to be at the same level.

Q: Your trading segment recorded losses on the EBITDA front of about Rs 29 crore. Could you take us through what went wrong?

A: The trading segment’s performance in the last quarter has not been good mainly because of this foreign exchange variation. We had to make some provisions for the foreign exchange loss of around Rs 83 crore in total. But hopefully in the coming quarter, since the rupee is now strengthening, we can write back those and at 31st March we'll be in much better position for the trading sector also.

Q: Do you have any high cost inventory which might affect results in the current quarter?

A: No. We have already started taking the forward cover when we had bought some DAP and NPKAT when the rupee was 53 versus dollar. So I think we will not have much problem in liquidating this DAP and NPK.