DCM Shriram in its Q3 earnings saw profits jump up 40 percent. The company also reported a significant expansion in margins. They have announced investment of Rs 1,000 crore in the chemicals business.
Ajay S Shriram, Chairman and Senior Managing Director of DCM Shriram, said the company is looking to get into value added products across the board. "The first stage is Epichlorohydrin (ECH) and Hydrogen Peroxide. These are both value additions which will be coming up in the next 24 months. We are setting up research and development center to get into details of what epoxy’s we can get into which I hope in about 12 months’ time we are in a more definite position to look at investments there too. As the studies go on, we will continue adding value to all these products to move the value chain," he said in an interview to CNBC-TV18.
Shriram said they were extremely comfortable with their cash flows. "Our cash flows every year is in the range of about Rs 500-600 crore. The implementation of these two projects will be approximately two years. Maybe we won’t have to take debt depending on what the investment plans are for the other businesses, but our ratios are very satisfactory. We are not going to have any problem taking debt even if we do marginally over the next couple of years. So, we are quite comfortable as far as our cash flows are concerned," he said.
He added that their sugar and ethanol business performed satisfactorily during the lockdown. However, he said they had cut down production of caustic soda due to slowdown in demand.
"The entire lockdown, state and central government were very proactive. Our sugar factories ran throughout, the ethanol business ran throughout and they have done satisfactorily over the last nine months. However, our caustic soda business had a tough time because during the lockdown markets fell, demand fell and so we had to cut production quite substantially. However, in Q3, businesses are picking up and our caustic soda chlorine plant is running today at about 80 percent capacity. PVC business is also doing well. So overall our stability is coming back," he said.Watch video for more.