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Grasim reports better performance for Q3

25
Jan '12
Grasim Industries Limited, an Aditya Birla Group company, announced its results for the third quarter ended 31st December 2011. The company's performance has been encouraging.

Net revenue increased by 17 per cent at Rs. 6,364 crore (Rs. 5,461 crore). PBIDT grew by 23 per cent from Rs. 1,267 crore to Rs. 1,554 crore. Net profit at Rs. 669 crore (Rs. 502 crore) rose by 33 per cent.

Viscose Staple Fibre (VSF)
The business performance was subdued due to the challenging environment. After witnessing an upturn in September, sentiments were affected during the quarter as cautious approach was adopted by the textile value chain, given the Euro zone uncertainties. Consequently, demand and prices remained under pressure, impacting volumes by 8 per cent. Increase in input costs due to rupee depreciation, impacted operating margins.

Chemical business
The chemical business continued to deliver good performance. Caustic production at 68,741 tonnes grew by 3 per cent supported by full capacity utilisation. Sales volumes were higher by 6 per cent. Caustic prices remained firm in line with international trends.

VSF and chemical capex
The VSF (120,000 TPA) and chemical (182,500 TPA) greenfield projects at Vilayat, Gujarat and brownfield expansion (36,500 TPA) of VSF at Harihar, Karnataka are in line with the schedule. The construction activity is in full swing. These projects are slated for commissioning in FY13. A total capex of Rs. 3,400 crore has been earmarked for the VSF and chemical business for expansion projects and modernisation.

Further, plans are afoot to set up a 180K TPA greenfield VSF plant in Turkey in joint venture with Group companies. Grasim has invested 1/3rd of the initial capital required for acquiring land and meeting initial expenses.

In VSF, the demand may remain volatile in the present macro economic conditions. In cement, the surplus scenario should subside gradually over a period of 2-3 years with an expected growth in demand. The changed pricing mechanism by Coal India Limited with effect from January 2012 will lead to increase in energy costs. The rising energy cost is a challenge in both the businesses in the present context.

Capacity expansions under implementation will enable the company to grow at a rapid pace and consolidate its leadership even further.

Grasim Industries Limited


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