Deepak Fertilisers & Petrochemicals Corporation Ltd. (DFPCL) reported a 44% year-on-year decrease in net profit to ₹141.4 crore for the December quarter.
DFPCL’s revenues increased by 10% to ₹2,830.07 crore. The EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) fell by 27% to ₹353 crore, and the profit margin decreased by 485 basis points to 4.9%. Higher raw material costs and lower offtake significantly impacted profitability.
Chemical Segment Challenges
In the mining chemicals segment, the company experienced a challenging quarter. The ammonia and Isopropyl Alcohol (IPA) sectors faced difficulties that affected EBITDA. The industrial chemicals sales volumes declined by 26% year-on-year, leading to flat revenue growth in this segment. A drop in IPA prices resulted in a 20% decrease in revenues.
In the crop nutrition division, the crop-specific speciality product, Croptek, saw flat volume performance due to lower intake caused by unseasonal heavy rainfall and delayed Rabi sowing.
The speciality fertiliser business, which includes Bensulf Superfast, Solutek, and WSF NPKs, reported a 3% year-on-year decline, also attributed to the unseasonal heavy rain and rising sulphur costs.
Future Growth Outlook
The above-normal monsoon has improved ground moisture levels and overall water reservoir storage. The company anticipates a strong Rabi season ahead. However, the continuing increase in raw material prices would remain a challenge.
The company’s board has approved the permanent closure and dismantling of its 300 TPD methanol plant, which has not been operational since August 2021 and outlived its utility.
The dismantling of this plant will free up land for potential alternative projects that could leverage brownfield growth opportunities and facilitate a transition towards cleaner and sustainable manufacturing practices, the company said.