Consolidated net profit fell to 3.42 billion rupees ($42.16 million) in the three months ended Dec. 31, from 3.50 billion rupees a year ago.

"The operating environment is very challenging globally," DCM's chairman Ajay Shriram and vice chairman Vikram Shriram said in a joint statement, adding that captive energy costs for the company continued to be high, but would improve in the coming quarters.

DCM, which competes with Pidilite Industries, BASF India and Century Textiles and Industries, said total expenses jumped 27.5% in the quarter, led by rising costs of material, as well as higher power and fuel costs.

Raw material costs, which accounts for half of its total expenses, rose 13.43% in the third quarter while power costs, which constitutes nearly one-fifth of total costs, rose 11.56%.

The New Delhi- based company had said in its annual report that the ongoing Russia-Ukraine conflict had led to cost escalations in projects due to a rise in commodity prices.

DCM's Chloro-Vinyl segment, which contributes the most to its reveneue, logged a 7.87% fall in revenue.

It also declared an interim dividend of 5.80 rupees per share.

($1 = 81.1240 Indian rupees)

(Reporting by Ashish Chandra in Bengaluru; Editing by Nivedita Bhattacharjee)