VSF sales volume up 9% at Grasim in Q2 FY'14

Consolidated Financial Performance:

Grasim Industries Limited, an Aditya Birla Group Company, has reported Revenue of ` 6,849 crore and Net Profit of ` 450 crore in the 2nd quarter of FY 2014 vis-à-vis ` 6,615 crore and ` 620 crore respectively in the 2nd quarter of FY 2013.

Viscose Staple Fibre

VSF business has recorded a satisfactory performance, given the challenging market conditions. Supported by capacity expansion at Harihar, production increased by 15% over last year.

Sales volume at 93,025 MT was up by 9% led by higher exports. Though VSF demand is growing globally, the overcapacity in China created at the time of VSF boom has created pressure on realizations in global markets.

The rupee depreciation led increase in pulp cost was offset by decline in caustic and sulphur prices. However, lower realisation resulted in marginal decline in operating profit in standalone business. Sequentially, operating profit rose by 29% with higher volumes as well as better realisation. Consolidated PBIDT of the business has also improved sequentially by 68% from ` 161 crore to ` 269 crore, supported by better performance from pulp units.

Cement Subsidiary (UltraTech Cement)

The combined cement and clinker sales volume was 10.03 Mn. Tons. Net Revenue stood at `4,870 crore (`4,972 crore). Profit after Tax was at `280 crore (`553 crore). Its performance has been impacted mainly on account of lower selling prices as well as subdued demand owing to monsoon impact and low offtake from the infrastructure and housing sectors.

The benefit of softening in prices of imported coal was largely negated by the devaluation of the rupee. Optimization of the fuel mix helped in power and fuel cost reduction.

Chemical Business

The Chemical business reported a 26% rise in production and 20% growth in sales volumes, with uninterrupted operations at Nagda and the commissioning of the Caustic Soda plant at Vilayat (Gujarat) in Quarter 1. Volumes will improve with the gradual ramp up of capacity. ECU realisations saw a correction from the peak level witnessed during FY 2013, even as it rose by 4% QoQ.

VSF & Chemical Capex

The VSF project (120,000 TPA) at Vilayat in Gujarat is expected to be commissioned in a phased manner in Quarter 4 and Epoxy project (51,000 TPA) in Quarter 3. The commissioning has been delayed by recent floods at Vilayat, causing damage to power plants and other equipments.

Cement Capex

With the commissioning of the grinding unit (1.6 Mn. TPA) at Jharsuguda, Odisha in October 2013, Cement capacity stands augmented to 55.5 Mn. TPA. On commissioning of all the projects currently under implementation and the acquisition of Gujarat cement unit of Jaypee Cement Corp., UltraTech’s cement capacity will increase to 70 Mn. TPA.

Grasim Industries