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VSF business of Grasim reports lower sales in Q2

23
Oct '08
Grasim Industries Ltd., an Aditya Birla Group Company, today announced its results for the 2nd quarter ended 30th September, 2008. Its Consolidated Revenues stood at Rs 47.89 billion against Rs 39.64 billion in 2nd quarter of last fiscal.

Net Profit was lower at Rs.486 crores against Rs.620 crores. Viewed in the backdrop of the general slowdown in the economy and rising input costs, which has affected all industries in general and the sectors that Grasim operates in, in particular, the performance has been satisfactory.

Production of Viscose Staple Fibre stood at 62,973 MT against 69,678 MT in the same period of previous year, registering a negative growth of 10 percent. Correspondingly sales volumes also fell to 62,536 MT from 70,183 to post a de-growth of 11 percent

The performance of VSF business was impacted due to the sluggish demand, given the global slowdown and liquidation of inventory in the value chain. The textile sector has been adversely affected due to the rising inflation and a shift in consumer preferences.

In line with market realities, the Company has scaled down its production. An unprecedented increase in the price of sulphur and high pulp and caustic soda prices, coupled with the weakening of the Indian rupee, led to a drop in operating profits and margins.

Demand is expected to remain subdued in the short to medium term until the global economic situation improves. Margins are expected to remain range bound due to lower volumes and high input costs. While the prices of pulp and sulphur have started declining, the positive impact thereof is partially offset by the weakening rupee.

The conversion of AV Nackawic plant from paper grade pulp to rayon grade pulp was completed during the quarter. According to the company the long-term outlook for the VSF business is positive.

Other than viscose staple fibre, Grasim has interests in cement, caustic soda and sponge iron.

Fibre2fashion News Desk - India


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