Coromandel net profit falls 11.7% in Q4

Coromandel International Ltd, a part of the Rs.17,000 crore Chennai-based Murugappa group posted a net profit decline of 11.7% for the fourth quarter ended on 31 March post adjustment on consolidated basis. The fertiliser maker registered a net profit of Rs.62.64 crore compared to Rs. 71 crore in the year ago period. The adjustment was on account of a non-compete fee that Coromandel had to pay to the promoters of Sabera Organics Gujarat Ltd, a company whcih Coromandel acquired in June 2011 (AgroNews 2011-06-02).

Coromandel sales grew by 132% to Rs.2735.64 in the January-March period as against Rs.1179.16 crore in the same period over previous year. For the full year ended on 31 March, Coromandel clocked sales of Rs.9,789 crore against previous year’s 7,530 crore up by 30%, while the net profit declined by 8.5% to Rs.634.54 crore post adjustment.
On standalone basis the net profit increased by 67% to Rs.121.54 crore for the quarter ended on 31 March compared to the year ago period.

"The company improved performance in all segments despite volatile raw material prices and depreciating rupee made business environment challenging,” said Kapil Mehan, managing director of Coromandel.

"The increase in fertiliser prices and volume sales helped Coromandel to come out with a decent number in the fourth quarter,” said Rethish Verma S, research analyst at Cochin-based Doha Brokerage and Financial Services Limited (DBFS).

"We expect the company will be able to maintain the EBITDA margins as fertiliser prices are expected to hold out in this financial year as well,” Verma said.

Coromandel has earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 10.4%.

Coromandel plans to spend Rs.450 crore on capital expansion this year, to augment its fertiliser capacity from 3.27 million tonnes to 4 million tonne. Out of Rs.450 crore, the company said it plans to borrow around Rs.200 crore as external commercial borrowings and remaining through internal accruals.

Coromandel is spending Rs.350 crore on expanding the capacity of its Godavari Fertiliser plant in Kakinada from 1.7 million tonnes to 2.2 million tonnes.

"We are expecting to begin commercial production from Kakinada to begin from the second half of this year,” Mehan said.

The company is setting up a green field single super phosphate (SSP) plant in Bhatinda, Punjab with an investment of Rs.116 crores.

The plant is expected to be commissioned in next one year, Mehan said.

As part of its de-risking strategy– Coromandel plans to increase the revenue share of non-susbidy business from current 28% to 50% in 3 to 4 years. The non-subsidy business includes crop protection and specialty nutrients. The company in June 2011 acquired Sabero Organics Gujarat Ltd which produces pesticides.