
Weak Rouble troubles CUMI’s Russian subsidiary VAW
The Hindu
CUMI's Russian subsidiary VAW posted 6% decline in sales in rupee terms in H1 FY24 due to weak Rouble. CUMI's overall growth in H1 is 9.6-10%. VAW's performance was good in local currency terms, with highest-ever quarterly sales of 2.5 billion Roubles in Q2. South African subsidiary Foskor Zirconia posted lower sales due to postponement of orders and price pressure. German arm Awuko Abrasives to post €2.5 million losses in FY24. CUMI debt-free, free cash generation good, overall performance good in H1. Standalone growth 10-12%, consolidated 5%.
Carborundum Universal Ltd.’s (CUMI) Russian subsidiary Volzhsky Abrasive Works (VAW) posted contraction in sales in rupee terms in the first half of FY24 on account of a weak Russian Rouble, said CUMI Managing Director Sridharan Rangarajan.
“It is important to bring the perspective of war here,” Mr. Rangarajan said. “VAW, our Russian subsidiary, grew in H1 in Rouble terms 24% (consolidated basis). However, in Rupee terms, this turned out to be a de-growth of 6%,” he said during an earnings call.
According to him, the conversion rate of Rouble to Indian Rupee during H1 of FY23 was 1.24 and in H1 of FY24, it stood at 0.94 whereas the exchange rate remained the same. The overall growth of CUMI in H1 would be in the range of 9.6%-10%.
He also pointed out that VAW’s performance had been ‘good’ in local currency terms and delivered its highest-ever quarterly sales of 2.5 billion Roubles in Q2 against 1.86 million Rouble. Also, in H1 basis sales grew by 24% to Rouble 4.9 billion.
Operations were running well and there had been an increase in sales volume compared with last year — 4% in silicon carbide, 18% in abrasives and 10% in refractories. Also, price realisations were better compared with the previous years, he said.
“When converted to INR, the story looks a little different and shows downward performance because of a stronger Rouble during Q2 of the last year where it was at one Rouble equivalent to 1.33, whereas it has become much weaker at 1.01 in Q1 FY24 and 0.88 in Q2 FY24.”
“We delivered a profit of Rouble 418 million, same as during Q1 of the current year against Rouble 236 million during Q2 over the last year,” he said.