DCM Shriram on Tuesday reported a 45 per cent increase in its consolidated net profit at Rs 252.55 crore for the quarter ended December and announced a Rs 1,000 crore investment to grow its chemical business. Its net profit stood at Rs 174.35 crore in the year-ago period.
Total income stood at Rs 2,175.76 crore in the third quarter of this financial year as against Rs 2,229.49 crore in the corresponding period of the previous year, DCM Shriram, which is into sugar, fertilisers and chloro-vinyl businesses among others, said in a regulatory filing. The board declared an interim dividend of 275 per cent, which is Rs 5.50 per equity share of the face value of Rs 2 each for the financial year 2020-21.
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It approved an investment of Rs 1,000 crore in chemical business for various projects at the existing site of Bharuch (Gujarat) plant. DCM Shriram will set up a plant to produce Epichlorohydrin (ECH) with a capacity of 51,000 tonnes per annum, along with a glycerine purification facility. It will also produce hydrogen peroxide (H2O2) at a capacity of 52,500 tonnes per annum.
A multipurpose product research and development centre will be set up and the capacity of anhydrous aluminium chloride will be expanded. "These projects would be financed through internal accruals and debt. The objective of these projects is to enter downstream chemicals linked to the chlor-alkali business of the company," it said.
The R&D centre is being set up to enable forward integration of existing products and new products i.e. ECH and H2O2. This will also set up the base of the company for other value-added chemicals going forward. Regarding anhydrous aluminum chloride, the objective of expansion is to meet growing demand and derive economies of scale.
Ajay Shriram, Chairman and Senior Managing Director, said, "the company has witnessed a sequential improvement in its quarterly performance as the challenges posed by COVID-19 reduced. This quarter has been particularly robust, wherein almost all are businesses operated at normal levels." "Given our resilient performance in last nine months, our balance sheet strength, stable free cash-flows and the improvement in the economic environment, the board has approved investment in Chemical downstream products of Epichlorohydrine, Hydrogen Peroxide and expansion of Aluminum Chloride," said Vikram Shriram, Vice Chairman and Managing Director, DCM Shriram.
These steps augur well for growth and strengthening of its chemicals business, said Ajay Shriram. "Chlor-alkali business continues to face headwinds of supply being in excess of demand leading to subdued prices. Our efforts on cost optimisation in the past and going forward will ensure reasonable margins and competitiveness," he said.
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