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Grasim posts excellent performance for Q4 2007
28 Apr '07
4 min read
Not withstanding the suspension in operations for 48 days on account of water shortage, capacity utilisation was higher at 93 per cent, vis-à-vis 90 per cent recorded for the preceding year. The business registered a 3 per cent increase in sales volumes at 250,725 tons.
Realisations were up by 16 per cent at Rs.85,729 per ton. This positive performance has helped to offset the steep rise in input costs. The robust growth in VSF business is a reflection of the shift in consumer preference towards cellulosic products.
The business' performance during the quarter too was good. Higher production, sales volumes and improved realisations led to a 29 per cent jump in operating profits.
To meet the growing demand for the product, the company will be augmenting its capacity. A 63,875 tons per annum brownfield expansion at Kharach (Gujarat) has been planned. It is expected to be completed by end FY08. The company's investment on the expansion and modernisation at its various plants would be to the tune of Rs.712 crore.
Additionally, the company is in the process of obtaining regulatory approvals for expanding its capacity at Harihar (Karnataka) by around 31,000 tons per annum. Upon completion, the company's VSF capacity would stand enhanced to 365,000 tons. The capacity of its Chinese joint venture will be ramped up from 30,000 tpa to 60,000 tpa by Q2FY09.
The company, being the lowest cost producer of quality VSF, is fully geared to capitalise on the increased demand for the product, which it has generated. The thrust on propagation of speciality fibres, both in domestic and export markets bode well for the business. The outlook for the VSF business continues to be bright.
The performance of the chemical business was constrained during the year due to the breakdown of a captive power plant, which remained shut during the second and third quarters. Its operations were also affected due to water shortage during the first quarter of the year. Both production and sales, as a result, were impacted. The abnormally low prices of chlorine and hydrochloric acid resulted in subdued ECU realisations.
The normalcy in operations was restored during Q4FY07. As a result, production was higher by 10 per cent at 47,076 tons and sales volumes were up by 8 per cent at 47,709 tons for the quarter. The caustic soda capacity was raised from 190,800 tpa to 258,000 tpa during the quarter.
VSF and cement will continue to be the growth enablers. Besides, Grasim's financial framework enables it to pursue aggressive business growth strategies while retaining the prudent capital structure. The cost optimisation measures, sweating of assets, far-sighted financial management and above all, Grasim's solid fundamentals, will have a salutary effect on the company's future. The prospects for the company continue to be positive.
Realisations were up by 16 per cent at Rs.85,729 per ton. This positive performance has helped to offset the steep rise in input costs. The robust growth in VSF business is a reflection of the shift in consumer preference towards cellulosic products.
The business' performance during the quarter too was good. Higher production, sales volumes and improved realisations led to a 29 per cent jump in operating profits.
To meet the growing demand for the product, the company will be augmenting its capacity. A 63,875 tons per annum brownfield expansion at Kharach (Gujarat) has been planned. It is expected to be completed by end FY08. The company's investment on the expansion and modernisation at its various plants would be to the tune of Rs.712 crore.
Additionally, the company is in the process of obtaining regulatory approvals for expanding its capacity at Harihar (Karnataka) by around 31,000 tons per annum. Upon completion, the company's VSF capacity would stand enhanced to 365,000 tons. The capacity of its Chinese joint venture will be ramped up from 30,000 tpa to 60,000 tpa by Q2FY09.
The company, being the lowest cost producer of quality VSF, is fully geared to capitalise on the increased demand for the product, which it has generated. The thrust on propagation of speciality fibres, both in domestic and export markets bode well for the business. The outlook for the VSF business continues to be bright.
The performance of the chemical business was constrained during the year due to the breakdown of a captive power plant, which remained shut during the second and third quarters. Its operations were also affected due to water shortage during the first quarter of the year. Both production and sales, as a result, were impacted. The abnormally low prices of chlorine and hydrochloric acid resulted in subdued ECU realisations.
The normalcy in operations was restored during Q4FY07. As a result, production was higher by 10 per cent at 47,076 tons and sales volumes were up by 8 per cent at 47,709 tons for the quarter. The caustic soda capacity was raised from 190,800 tpa to 258,000 tpa during the quarter.
VSF and cement will continue to be the growth enablers. Besides, Grasim's financial framework enables it to pursue aggressive business growth strategies while retaining the prudent capital structure. The cost optimisation measures, sweating of assets, far-sighted financial management and above all, Grasim's solid fundamentals, will have a salutary effect on the company's future. The prospects for the company continue to be positive.
Grasim Industries Limited
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