InvestorQ : Why did Zuari Agro dip into a net loss in the Mar-20 quarter?
Dhwani Mehta made post

Why did Zuari Agro dip into a net loss in the Mar-20 quarter?

Khushi Patel answered.
4 months ago

Zuari Agro reported a net loss of Rs.255 crore for the Mar-20 quarter even as the total income almost halved on a YOY basis to Rs.1032 crore. The reason for the sharp fall in sales was its liquidity position which had suffered badly due to the delay in receipt of fertilizer subsidy from the government. That had led to negative working capital conditions.

Apart from the government subsidy angle, the company also struggled to pass on the higher raw material prices that it faced to farmers. This had also resulted in working capital issues for the company. This impacted the solvency of the company to the extent that it also led to recall of loans from two lenders. Prolonged shutdown of plants also did not help the cause.

Zuari Agro ended the year with a net current liability position of Rs.1506 crore as on March 31, 2020. This was only being aggravated by the non-availability of labour after most workers opted to return to their home states due to the pandemic. Supply chain disruptions and China related issues also hit the company performance badly.