Coromandel Q2 PAT Declines Due to Rising Costs; Plans ₹800 Cr Investment for New Plants in AP and Gujarat

Coromandel International Limited, part of the Murugappa Group and a provider of agricultural solutions, has reported a decline in net profit for the quarter ending September 30, 2024. The company's profit after tax (PAT) fell to ₹696 crore, down from ₹762 crore in the same quarter last year.

This decrease in profitability occurred despite a 7% rise in total income, which reached ₹7,509 crore, compared to ₹7,031 crore during the corresponding quarter of the previous year. For the first half of the financial year, the company's net profit stood at ₹1,027 crore, a decline from ₹1,267 crore in the same period last year. Total income for this period also decreased to ₹12,277 crore from ₹12,771 crore.

Coromandel International attributed the drop in net profit to rising input costs and reduced subsidy rates, which outweighed gains from higher sales volume and improved operational efficiencies. "The company registered a healthy performance in the quarter, led by higher sales volumes and improved operational efficiencies across the businesses. We continue to make sequential recovery quarter on quarter, despite lower subsidy rates and firming raw material prices," said Sankarasubramanian S, Managing Director & CEO.

The company noted favorable agricultural conditions, including an above-normal monsoon and increased crop sowing, which supported agri-input consumption.

In a proactive move, the board of directors has approved an ₹800 crore investment plan to expand operations. A portion of these funds will enhance granulation capacity by 7.5 lakh tons per annum for the production of complex and unique fertilizers at Kakinada in Andhra Pradesh, aimed at meeting the growing domestic demand for high-quality phosphatic fertilizers. Additionally, a multi-product plant for manufacturing recently off-patented fungicides will be established in Ankleshwar, Gujarat.

Despite the challenges faced in the quarter, Coromandel International remains optimistic about future prospects, bolstered by favorable agricultural conditions and increased government support for the sector.

HBL