Rallis India reported 45 per cent YoY fall in consolidated net profit in December quarter

Rallis reported 45 per cent year-on-year (YoY) fall in its consolidated net profit at Rs 13.76 crore in December quarter (Q3FY19). The Tata Group agrochemicals company had posted a profit of Rs 24.94 crore in the year-ago quarter. Operational revenue grew 6.9 per cent at Rs 417 crore on YoY basis.

EBITDA (earnings before tax, depreciation and interest) margin declined 300bps at 6.6 per cent from 9.7 per cent in the previous year quarter.

“The higher input cost – imports from China resulted in profitability and margin compression. The margins remain constrained owing to higher raw material prices,” Rallis India said in a statement.

The domestic crop protection segment is affected by irregular monsoon and volatility in farm income. Also, the sector is highly regulated by specific registration processes in different countries and is subject to various environmental rules and regulations.

The company said it is working towards improving product mix – share of value added / specialty products to offset the impact of rising raw material. It expects profitability to pick up going forward following growth specific initiatives undertaken towards driving growth.

The rating agency CRISIL believes the business risk profile will continue to be supported by healthy demand prospects for crop protection products in the domestic market, and increasing focus on exports and non-crop protection businesses. Furthermore, steady growth in cash accrual is expected to benefit the financial risk profile, particularly liquidity, over the medium term. Rallis is likely to remain critical for the parent, Tata Chemicals and keep receiving operational and managerial support.