Grasim Industries Q4 consolidated net profit falls

19 May '09

4 min read

Grasim, an Aditya Birla Group Company, announced its results for the 4th quarter ended 31st March, 2009.

Its Consolidated Revenues for the quarter rose by 5% to Rs.5,020 crores (Rs.4,765 crores). Cash profit for the quarter at Rs.1,114 crores (Rs.781 crores), was substantially higher by 43%, due to the impressive performance of the Cement Business and the benefit of lower current tax.

Net profit was however lower by 5 % at Rs.569 crores (Rs.599 crores), given the higher interest cost and substantially higher depreciation on account of commissioning of several new projects, the full benefit of which is expected to accrue only in the current year. Profit was also depressed due to the impact of economic slowdown.

Grasim's Consolidated Net Revenues for the year grew by 9%, at Rs.18,603 crores (Rs.17,141 crores). Cash profit for the year at Rs.3,938 crores (Rs.3,729 crores) was higher by 6%, consequent to lower current tax. Net profit at Rs.2,187 crores (Rs.2,609 crores) was lower by 16% due to higher interest cost and substantially higher depreciation, as various new projects were commissioned. Profitability was also impacted because of the increased input costs and economic slowdown.

Viewed in the backdrop of the current economic environment and its impact on the Company's VSF business (one of the Company's key businesses) and Sponge Iron business, the overall performance has been satisfactory.

Grasim's stand-alone Revenues for the quarter stood at Rs.2,932 crores (Rs.2,764 crores). Cash profit for the quarter at Rs.619 crores (Rs.466 crores) was substantially higher by 33% due to the impressive performance of the Cement business and benefit of lower current tax. Net profit was however lower by 13% at Rs.385 crores (Rs.441 crores) due to higher interest cost and substantially higher depreciation on account of commissioning of several new projects.

Stand-alone Net Revenues for the year grew by 6%, at Rs.10,940 crores (Rs.10,325 crores). Cash profit for the year was sustained at Rs.2,362 crores (Rs.2,365 crores). Net profit at Rs.1,648 crores (Rs.2,002 crores) was lower by 18% due to higher interest cost and substantially higher depreciation.

Dividend
The Board of Directors of Grasim has recommended a dividend of Rs.30 per share, at par with the dividend paid last year. The total outflow on account of dividend, including Corporate Tax on Dividend, would be Rs.316 crores.

Viscose Staple Fibre (VSF) Business
In VSF business, sales volumes during the quarter were higher by 6%, largely due to restocking by customers, though production was curtailed to liquidate inventory. The sharp fall in realisation and cost push effect on imported inputs resultant from the weakening rupee, impacted margins.

The performance of VSF business for the financial year was affected by the low demand and prices on account of the global financial crisis and recession. This, coupled with the slowdown of yarn exports from India to certain key markets like Brazil and Turkey, led to a significant reduction in sales and production volumes. The low demand for VSF and reducing prices of competing fibres have led to significant pressure on realisation.

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