Kamdhenu Limited posts 20% rise in profit in H1 of FY20

KOLKATA: Kamdhenu Limited, a leading manufactuer and seller of branded TMT bars, posted a 20% increase in total profit at Rs 13.3 crore in the first half of the financial year (H1FY20) compared to the same period last year. The company’s royalty income went up 26% year on year (y-o-y) in H1FY20 to Rs 48 crore, while Profit Before Tax in the company ‘s steel business was up 8% y-o-y at Rs 21 crore, an official statement said.

The company said in the face of headwinds in the domestic steel sector, it recouped its business strategy by reducing B2B trading sales and focus on improving efficiencies in own manufacturing and on franchisee-based business model which led to increased margins and better efficiency. The steel business contributed 81% of revenues whereas 19% of it came from the paints division.

Satish Kumar Agarwal, chairman Kamdhenu said: “Our volumes have grown by over 17% on back of our robust distribution network spread across the country.” During the first half, the average prices of TMT bars went down14% which led to lower profits in the company’s steel business. “However, we were able to grow our PBT in the steel business by 8%, mainly driven by our strong execution strategies and our brand pull, created through our large distribution and marketing strength,” he added.

The situation in the steel market is now improving, and we are seeing certain green shoots, Agarwal said adding, traction for TMT bars has improved significantly on account increase in government expenditure on the sector and retreat of monsoons.

Kamadhenu’s royalty income grew by 23% to Rs 23 crore in Q2FY20 and by 26% to Rs 48 crores for H1FY20. The company said it is on course to achieve its target of Rs 100 crore as royalty income during the current financial year.