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VSF production down by 9% at Grasim
29
Oct '10
Grasim Industries Limited, an Aditya Birla Group Company, announced its results for the 2nd quarter ended 30th September 2010.

The Company's performance was impacted by the stoppage of the Company's VSF Plant at Nagda for 25 days during the quarter on account of the water shortage due to the delayed monsoon. Its Consolidated revenue stood at Rs.4,503 crores (Rs.4,741 crores).

Net profit for the quarter was at Rs.323 crores as against Rs.781 crores in the corresponding quarter.

Viscose Staple Fibre (VSF)
VSF demand improved globally, after the initial weakness noticed during the quarter. This coupled with anticipated shortage in cotton crop has resulted into better prices.

Production at 69,802 MT was lower by 9%. With the advent of the monsoons, the plant is working to full capacity from 26th July, 2010. Though lower volumes and higher pulp prices led to a decline in the standalone profitability, a better performance from the Company's Pulp JVs in Canada resulted in softening the impact at the consolidated level. Pulp prices which rose by 52% in the last year, have since stabilized at the higher level.

The Company would continue to focus on market enlargement through product innovation and application development.

VSF Capex
The Company plans to set up an 120,000 TPA VSF plant at Vilayat, (Gujarat) at a cost of Rs.1,690 crores. The product mix will be in line with the market needs. The Company's capacity at Harihar (Karnataka) will be enhanced by 36,500 TPA through a brownfield expansion at a cost of Rs.449 crores. Both the projects are slated for commissioning by FY13.

Outlook
The long term prospects of the Company remain positive with its leadership position in both Cement and VSF businesses, focus on profitable growth and strong fundamentals. Besides, the substantial increase in capacities, improved cost optimization and higher productivity bode well for the Company in the years to come. Therefore, the Company is positive that its long term journey to growth and profitability will not be hampered by the challenging quarter gone by.

Grasim Industries Limited

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