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Grasim announces results for IIIQ FY2009 to be satisfactory
31
Jan '09
Grasim, an Aditya Birla Group Company, announced its results for the 3rd quarter ended 31st December, 2008.Its Consolidated Revenues were higher by 6% at Rs.4,632 crores (Rs.4,350 crores). Net Profit was lower at Rs.460 crores (Rs.721 crores) due to the weak performance by its Viscose Staple Fibre (VSF) business and higher input and energy costs. The performance is to be viewed in the backdrop of the unprecedented global economic downturn which has adversely impacted Company's key businesses.

During the 9-months ended 31st December, 2008, Grasim's Consolidated Revenues rose by 10% at Rs.13,578 crores (Rs.12,376 crores). Net Profit for the period was Rs.1,618 crores (Rs.2,011 crores). The Company earned a Cash Profit of Rs.2,824 crores, vis-à-vis Rs.2,948 crores in the corresponding period. Given the current economic environment and its impact on Company's key businesses, the overall performance is considered satisfactory.

Stand-alone Financial Performance:
On a stand-alone basis, Grasim's Revenues for the quarter stood at Rs.2,690 crores (Rs.2,615 crores). Interest cost rose by 90% as a result of commissioning of new projects and increased borrowings. Depreciation too was higher by 38% due to commissioning of new projects. These, coupled with the constrained VSF business performance and general slowdown in economy, impacted the Net Profit which stood at Rs.330 crores (Rs.554 crores).

For the nine-months period, the Company earned a Net Profit of Rs.1,263 crores (Rs.1,565 crores) and Cash Profit of Rs.1,744 crores (Rs.1,899 crores).

The performance of VSF business was adversely affected due to depressed consumer demand for textile globally. Sales volumes were lower by 22%. The Company scaled down its production considerably in view of the impaired sales. Operating profits and margins dipped, also due to lower realization, higher pulp and sulphur cost and the weakening of rupee.

The demand for VSF is expected to remain muted until such time the textile consumption both in the domestic and western markets shows some signs of recovery. Margins are expected to remain under pressure, despite lower input costs, on account of further reduction in realization. The Company has reduced the prices of VSF further with effect from January, 2009 to prevent its substitution by competing fibres and imports.

The performance of VSF business is in line with global scenario.

The Company will continue to fortify its leadership position in the Cement and VSF sectors. With substantial increase in capacities, improved cost optimization, higher productivity and strong fundamentals, the prospects for the Company appear positive.

Aditya Birla Group

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