RCFL Q1 profit down 84% to Rs 11 crore

New Delhi: State-owned Rashtriya Chemicals and Fertilizers Limited (RCFL) reported an 84 percent decline in consolidated net profit for the first quarter of the financial year 2024-25, with profits falling to ?10.80 crore. This significant drop, compared to ?67.79 crore in the same quarter of the previous year, is attributed to higher finance costs, as disclosed in the company's latest regulatory filing.

Despite the sharp decline in profit, RCFL's total income for the quarter rose to ?4,396.06 crore, up from ?4,042.95 crore in the corresponding period of the previous year. However, the increase in expenses, which surged to ?4,409.93 crore from ?4,009.02 crore, outpaced the rise in income, further pressuring the company's profitability.

A key factor contributing to the decline in profits is the government's decision to reduce the rates of Nutrient Based Subsidy (NBS) since October 1, 2023. This policy change has particularly impacted the profitability of phosphatic and potassic fertilizers, sectors where RCFL has significant exposure.

RCFL, a major player in the Indian fertilizer industry, is heavily reliant on government subsidies to maintain competitive pricing for its products. The reduction in NBS rates has therefore squeezed margins, making it more challenging for the company to sustain profitability in these segments.

Additionally, the company's share price reflected investor concerns, with shares of RCFL closing down 1.40 percent at ?200.35 apiece on the Bombay Stock Exchange (BSE) on Monday.

Looking ahead, RCFL may need to focus on cost optimization and exploring alternative revenue streams to counteract the adverse effects of subsidy cuts and rising finance costs.