Dwarikesh Sugar Industries reported a sharp decline in its performance for the quarter ended March, blaming a “rapid & unexpected fall” in sugar prices.
Against net profit of Rs 46 cr for the same quarter last year, the company reported net loss of Rs 9.2 cr for the March quarter this year.
Operating profit (EBITDA) too was in the negative at 7.7 cr versus Rs 119.5 cr last year.
This was because it was able to get only Rs 3,077 for 100kg of sugar sold in the quarter, compared to Rs 3,641 in the same period last year and Rs 3,465 per quintal for the year as a whole.
“There has been rapid & unexpected fall in sugar prices in the last few months resulting in pressure on the margins of sugar segment,” it said.
“The fall in the price of sugar is accentuated by unprecedented increase in the estimate of sugar production for the sugar season 2017-18.”
The company, was also hit by a slight decline in volumes. It sold 9.45 lakh quintals in the quarter, compared to 9.94 lakh in the year-ago period.
For the year as a whole, it sold 37.36 lakh quintals, up from 29.69 lakh quintals in the previous year.
Due to the sharp correction in prices towards the end of the year, the overall price realization for the full year fell to Rs 3,465 per quintal from Rs 3,528 per quintal last year.
“The Government has initiated a series of measures and is in the process of initiating more measures to support the sugar prices and the viability of sugar mills. Our efforts towards improving operating efficiencies and controlling costs shall continue with renewed vigor,” it added.
The lower prices not only impacted revenue, but also led to a write-off of Rs 91 crore on the inventory of 19.11 lakh quintals that the company had at the end of the year.
“Sugar inventory is valued at the prevailing selling prices which is lower than the cost resulting in inventory write down,” it said.
The company’s interest costs almost halved to Rs 7 cr “on account of accelerated repayment of term loans” and aggressive selling of sugar which resulted in lower working capital utilization, it said.
“We shall continue to strengthen our Balance Sheet by pruning & recalibrating our debt profile aggressively..”
The long term debt of the Company stood at Rs. 70.15 crore including outstanding preference shares of Rs. 16.10 crore and interest free SEFASU loan of Rs. 16.97 crore.