DCMSRIND - DCM Shriram Inds

📊 NSE: DCMSRIND 🏢 Sugar 📅 Last Updated: 12/13/2025 21:24

💰 Financial Performance

Revenue Growth by Segment

Sugar, Alcohol, and Power segment revenue contribution increased to 51.33% in FY25 from 46.10% in FY24. Industrial Fibres (Rayon) segment declined to 27.58% from 33.44% YoY. The Chemical segment remained stable at 21.09% contribution in FY25 compared to 20.46% in FY24.

Geographic Revenue Split

Export sales from the Chemical and Rayon segments contributed approximately 31.69% of total gross sales in FY24, up from 22.74% in FY23. Primary export regions include Europe, China, USA, and Singapore.

Profitability Margins

Operating profit margin was 11.20% in FY25, a 4.27% decline from 11.70% in FY24. Net profit margin stood at 4.82% in FY25, down 11.72% from 5.46% in FY24. Return on Net Worth (RONW) fell 21.79% to 11.34% in FY25 from 14.50% in FY24.

EBITDA Margin

Operating (EBITDA) margins moderated to 10.18% in FY25 from 11.32% in FY24, primarily due to lower fibre volumes, softer chemical realisations, and higher input and freight costs.

Capital Expenditure

The company is not expected to incur substantial capital expenditure in the near term as it focuses on debt repayment and the ongoing composite scheme of arrangement. Scheduled term loan repayments of approximately INR 39 Cr are expected in FY26.

Credit Rating & Borrowing

Long-term bank facilities and fixed deposits are rated CARE A+ (Rating Watch with Negative Implications). Short-term bank facilities are rated CARE A1+ (RWN). Interest coverage ratio was 6.47x in FY25, a 6.64% decrease from 6.93x in FY24.

⚙️ Operational Drivers

Raw Materials

Sugarcane (primary for sugar/alcohol), Wood Pulp (imported for Rayon), and Toluene (imported for Chemicals). Specific cost percentages for each material are not disclosed.

Import Sources

Wood pulp is imported from the USA for the Rayon segment. Toluene is imported for the Chemical segment from international markets.

Capacity Expansion

Current installed capacity includes Chemicals at 21,463 tonnes p.a. and Rayon at 17,055 tonnes p.a. No specific planned expansion figures were disclosed.

Raw Material Costs

Profitability was impacted by higher raw material costs due to commodity inflation across all segments. Sugarcane prices are mandated by the Government of Uttar Pradesh (GoUP).

Manufacturing Efficiency

Inventory turnover ratio decreased 11.17% to 1.59x in FY25 from 1.79x in FY24. Debtors turnover ratio was 7.96x in FY25.

📈 Strategic Growth

Growth Strategy

The company is executing a Composite Scheme of Arrangement to demerge Chemical and Rayon businesses into separate listed entities (DSFCL and DSIL) to allow for focused management, independent capital allocation, and sectoral collaborations. R&D and Market Studies are being utilized to reduce future pressures on existing products.

Products & Services

Sugar, Alcohol (Ethanol), Power, Industrial Fibres (Rayon Tyre Cord), Chemicals, and Defence/Engineering projects.

New Products/Services

The company is exploring Defence and Engineering projects within the Rayon undertaking to diversify revenue streams.

Market Expansion

Strategic reviews are being conducted to optimize results in short and medium-term planning due to prevailing geo-political scenarios.

Strategic Alliances

The demerger is intended to provide scope for independent growth and collaborations on a sectoral basis for the segregated business verticals.

🌍 External Factors

Industry Trends

The sugar industry is cyclical and highly regulated. Recent trends include restrictions on ethanol production and supply, which impacted profitability across the sector in FY24.

Competitive Landscape

Competes with other Uttar Pradesh-based sugar mills and global chemical/rayon manufacturers.

Competitive Moat

Moat is derived from a long track record of operations and a fully integrated sugar model (sugar-power-alcohol) which provides a buffer against cyclicality.

Macro Economic Sensitivity

Highly sensitive to Government of India and GoUP policies regarding cane pricing, sugar quotas, and ethanol blending mandates.

Geopolitical Risks

Geo-political scenarios since Q4 have necessitated more active strategic reviews to minimize risks to the Rayon and Chemical segments.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Companies Act 2013 and specific sugar industry regulations including the GoUP cane price policy and Essential Commodities Act classifications.

Legal Contingencies

Pending litigations as of March 31, 2025, are disclosed in Notes 41 and 52 of the standalone financial statements. Specific INR values for these contingencies were not provided in the summary.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the impact of the demerger on the capital structure and the loss of diversification benefit for the residual sugar entity, which may lead to moderate leverage levels due to high working capital needs.

Geographic Concentration Risk

31.69% of gross sales are from exports, primarily to Europe, China, USA, and Singapore.

Third Party Dependencies

Dependency on wood pulp imports from the USA for the Rayon segment.

Technology Obsolescence Risk

The company uses R&D to mitigate future pressures on existing products. An audit trail feature in accounting software was not enabled at the database level from April 1, 2024, to March 19, 2025.