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Grasim's VSF business clocks record volumes in Q2FY15
29
Oct '14
Supported by the commissioning of two lines, the VSF business at Grasim Industries, achieved record sales volume of 100,927 tons, up 8% from a year ago quarter in the second fiscal quarter ending September 2014.

“Concerted market development activities have led to VSF market expansion in the domestic segment,” Grasim said while releasing the results for the second quarter of fiscal 2014-2015.

Grasim said net revenues at its VSF division climbed 5% from second quarter of fiscal 2013-14 to Rs 1,271 crore in the reporting quarter.

However, as realisations were impacted by weak global prices due to overcapacity in China, PBIDT at Rs 151 crore in the quarter under review was lower by 37% year-on-year.

“Higher share of value added products partially offset the impact of decline in prices and higher volume and full benefit of lower pulp prices have helped in improving profitability sequentially” the Aditya Birla Group company explained.

Grasim informed that VSF lines 1 & 2 with a total capacity 77,000 TPA had been commissioned in July 2014 at its greenfield VSF project at Vilayat, Gujarat.

It also mentioned that trial run has already started for the remaining two lines with a combined capacity of 43,000 TPA to produce specialty fibre.

Post this expansion, the total VSF capacity at Grasim will rise to 498,000 TPA.

Meanwhile, driven by robust volume growth in all the businesses supported by new and acquired capacities, consolidated revenues at Grasim surged by 16% from a year ago quarter to Rs 7,945 crore in the reporting quarter.

PBIDT for the second quarter of fiscal 2014-15 increased by 12% to Rs 1,277 crore from Rs 1,143 crore in the corresponding quarter of fiscal 2013-14.

Higher interest and depreciation, on account of commissioning of new projects, led to PBT rising slower by 5% to Rs 700 crore from Rs 666 crore in the prior fiscal year second quarter.

Grasim said tax expenses were higher for the reporting quarter compared to the corresponding quarter last year during which period there was a write back of tax provision and commissioning of power plant leading to lower tax liability.

As a result, net profit at Grasim slipped 7.55% to Rs 416 crore from Rs 450 crore in the second quarter of fiscal 2013-14.

In its outlook for the VSF business, Grasim noted that margins are likely to remain under pressure in the near term due to the overcapacity in China.

It added, “Sharply declining cotton and polyester prices is a major challenge and may impact the growth of VSF consumption.

“The slowdown in new capacity additions in China should lead to an improvement in industry utilization and our focus on cost optimisation will continue relentlessly.” (AR)

Fibre2fashion News Desk - India

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