Announcing the fifth quarterly profit decline in a row, chemicals maker SRF Ltd on May 7 reported that its specialty chemicals division has faced challenges due to both dumping and intense competition from Chinese manufacturers.
Specifically, the fluorochemicals sector saw a downturn due to Chinese companies dumping the Indian and global markets with refrigerants, resulting in pricing pressures and a decrease in sales volumes.
However, the management expressed hope that things will get better in FY25. “While the general performance has been weak, we have seen a reasonable recovery in our chemicals business in the fourth quarter, as we had envisaged. We believe that this recovery will pick up pace in the second half of FY25,” said chairman and managing director Ashish Bharat Ram.
During the quarter, the specialty chemicals business continued to face headwinds due to inventory rationalisation by certain key customers, while performing better than Q3FY24. In addition, a lot of capacity has come up in China, leading to pricing pressure on intermediate products.
The chemicals business reported a decline of 14 percent in its segment revenue from Rs 2,102 crore to Rs 1,816 crore during Q4FY24 over the corresponding period last year. Operating profit at the division decreased 33 percent from Rs 739 crore a year earlier to Rs 498 crore in Q4FY24.
The fluorochemicals business was hit hard by Chinese dumping of refrigerants, resulting in pricing pressure and reduced sales volumes. Additionally, slow growth in the agrochemicals and pharmaceuticals sectors dampened demand for certain key industrial chemicals. On a brighter note, the business expanded its market share in the Dymel/propellant vertical, both domestically and internationally, by venturing into new markets and diversifying its customer base.
Meanwhile, the packaging films division encountered significant challenges, particularly in Q4FY24, with intense margin pressure. This was due to the activation of numerous new production lines in both the BOPET (biaxially oriented polyethylene terephthalate) and BOPP (biaxially priented polypropylene) films by competitors in Southeast Asian markets.
SRF Ltd on May 7 reported a 24 percent year-on-year decline in consolidated net profit at Rs 422 crore for the fourth quarter of FY24.
In the previous corresponding quarter, the company posted a net profit of Rs 562 crore, it said in a regulatory filing.
Its revenue from operations dipped 5 percent to Rs 3,570 crore against Rs 3,778 crore a year ago.
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