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Grasim posts 13% growth in Q3
27
Jan '11
Grasim Industries Limited, an Aditya Birla Group Company, reported its results for the 3rd quarter ended 31st December 2010.

Grasim's consolidated revenue for the quarter at Rs. 5,461 crores (Rs 4,846 crores) reflects a 13% growth. Net profit stood at Rs. 502 crores as against Rs. 580 crores in the corresponding quarter. The results include financials of Star Cement Company LLC and its subsidiaries, which have been acquired by UltraTech Cement, a subsidiary of Grasim. The VSF business continued to post good performance driven by the strong demand environment. The Cement business remained impacted by excess supply and higher energy costs. On QoQ basis, Cement business saw a partial recovery in prices, post monsoons.

Sequentially, net profit soared by 55% from Rs. 323 crores to Rs. 502 crores.

Viscose Staple Fibre (VSF)

The unprecedented rise in cotton prices benefitted VSF. Globally, prices were firm with rising spot pulp prices resulting in better VSF price in China.

Production was at 83,026 tons with full capacity utilization. Revenue recorded 17% growth backed by increase in sales volumes by 4% at 84,621 tons and improved realisations. Pulp prices have risen by 35% over the last year, which resulted in decline in operating margins at standalone level.

VSF Capex
The Company is setting up an 120,000 TPA VSF plant at Vilayat, (Gujarat) at an investment of Rs. 1,690 crores. The product mix will be in line with the market needs. In addition, the capacity at Harihar (Karnataka) will be raised by 36,500 TPA through a brownfield expansion at a capex of ` 449 crores. Both these projects are slated for commissioning in FY13.

VSF Outlook
Trends in China, prices of competing fibres and pulp will largely govern VSF prices. Prices are expected to remain firm in line with the competing fibres albeit with volatility. The Company will continue to focus on market enlargement through product innovation and application development.

Chemical Business

The Chemical business attained the highest ever production and sales volumes, supported by a capacity utilization of 104%. ECU realizations grew by 10% on a YoY basis led by the recovery in chlorine and HCL prices.

The demand outlook for caustic looks positive with the increased offtake from the Aluminium industry. Prices are expected to improve with a gradual increase in capacity utilization. A 182,500 TPA Caustic plant and a 60 MW power plant at Vilayat mainly for captive use is on the anvil. This will entail an investment of ` 772 crores.

Stand-alone Financial Performance

With regard to the Standalone performance, Revenues were higher by 19%. Net profit increased by 8%.

Outlook
The long term prospects of the Company remain positive, given its leadership position in both Cement and VSF businesses, its focus on profitable growth and strong fundamentals. The substantial increase in capacities, improved cost optimization and higher productivity bode well for the Company in the years to come.

Grasim Industries Limited

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