SRF Ltd Reports 7.3% Decline In Q4 Profit Due To Packaging Margin Pressure

SRF Ltd (SRFL.NS), an Indian manufacturer of chemicals and polymers announced a 7.3% decline in fourth-quarter profit on Tuesday due to severe margin pressure in its packaging film business.

The Gurugram-based company reported in an exchange filing that its combined net profit after tax for the three months ended March 31 was 5.62 billion rupees ($68.7 million), down from 6.06 billion rupees a year earlier.

The segment's revenue dropped 17% as a result of an increase in the cost of polypropylene and polyethylene films used in packaging film. Following the operationalization of multiple new lines in India and other countries, the company reported that the business was facing "strong headwinds with significant pressure on margins." Sales revenue increased 6% to 37.19 billion rupees.

Sales in the technical textiles sector, which supplies reinforcement for nylon and polyester yarns and fabrics, were hampered by weak demand. According to SRF, the segment's revenue fell by more than 13% as a result of fewer sales of nylon tyre cord fabrics.

The macroeconomic environment and sluggish demand provide significant obstacles for the chemical industry, which is already battling rising raw material costs and declining product prices.

The last four quarters had a 2-44% increase in SRF's sales and a 1% to 59% increase in profit. More than half of the company's revenue comes from the chemicals section, which saw a 34% increase in revenue to 21.02 billion rupees.