No COVID impact: Fertilizer maker Coromandel posts strong quarter

Coromandel International Limited, which makes the famous GROMOR brand of fertilizers, reported strong financial performance for the Apr-Jun quarter, indicating that farming activity in South India continued apace even during the COVID-19 lockdown.

The company reported a whopping 51% jump in its revenue for the Apr-Jun quarter compared to the same three months of 2019.

Even when compared to the January-March period, consolidated revenue was up by 12% at Rs 3,213 cr.

The strong sales momentum also had a salutary impact on the company’s margins, lifting profits at every level.

Profit before depreciation, interest, taxes and exceptional item (EBITDA) for the quarter ended 30 June 2020 was up by 113% at Rs 415 crores versus Rs. 195 crores during corresponding quarter of last year.

Consolidated net profit after tax for the quarter is Rs. 251 crores in comparison to Rs. 62 crores for the corresponding quarter last year.

This was despite a faster increase in material costs.

Material costs — including cost of purchased trading items and inventory restocking — rose by 22.3% to Rs 2,282 cr compared to the immediately preceding quarter, well ahead of the 12.0% growth seen in revenue.

However, the company got some respite from a diminution in its ‘other expenses’, which reduced by Rs 80 cr to Rs 205 cr, possibly indicating lower expenses on promotional activities.

The company gets about 85% of its revenue from the sales of fertilizers and related goods, and the remaining from the sales of pesticides and other crop protection devices.

Both segments saw robust growth during the quarter.

“Better than normal rainfall in our key markets, good soil moisture conditions and pro-active steps taken by the government in procuring the bumper Rabi harvest led to positive sentiments in the farming community resulting in early demand for agricultural inputs,” said Managing Director Sameer Goel.

Sales volumes of phosphatic fertilizers jumped by 75% over previous year and market share increased to 16% during the quarter vs. 13.2% during the corresponding period of last year.

He said the crop protection business is accelerating efforts on new product development and strengthening its strategic tie ups with global players.

The MD said the company focused on carrying out its operations during these tough times due to the essential nature of its products.

It benefited from its dedicated Mana Gromor retail chain to keep the goods moving. “Co-ordinated efforts ensured efficient management across the value chain right from sourcing, manufacturing, supply chain to last mile delivery. Focus on working capital yielded good results lowering the interest costs. The company leveraged Digital Marketing platforms to connect with the farmer community. Our channel partners and Mana Gromor retail centres ensured availability of agri inputs for meeting the increased demand,” he said.

The Murugappa Group company’s retail stores operated all through the quarter maintaining social distancing and ensuring adequate safety measures enabling farmers to procure agri inputs and farm solutions, he said.

“Retail stores extended digital farm advice through audio & video calls, webinars and messages. The stores successfully implemented direct delivery mechanisms to reach the products to the farmer’s field.

“The Government’s focus on agriculture and initiating large scale reforms in this sector provides opportunities for Coromandel to capitalise and grow,” Goel said.

“With an early onset of southwest monsoon and healthy reservoir position, we expect good traction in the upcoming Kharif season,” he added.