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Notable performance of VSF business for Q2 FY2010 – Grasim

30
Oct '09
Grasim, an Aditya Birla Group Company, announced its results for the 2nd quarter ended 30th September, 2009. The Company has reported excellent performance in both of its core businesses, viz., Cement and Viscose Staple Fibre.

Consolidated Revenue for the quarter grew by 6% at Rs.4,743 crores (Rs.4,486 crores). Notwithstanding a steep increase of over 143% in tax expenses, Net Profit rose by 61% at Rs.781 crores (Rs.486 crores).

On a stand-alone basis, Grasim's performance during the quarter has been impressive. Revenue was higher by 12 % at Rs.3,026 crores (Rs.2,703 crores). PBIDT at Rs.1,159 crores (Rs.678 crores) increased by 71 %. Despite higher interest cost, higher depreciation and a significant increase in tax expenses, Net Profit rose by 61 % at Rs. 674 crores (Rs.419 crores).

The Consolidated as well as the Standalone results for the quarter are not strictly comparable with the corresponding quarter's results, owing to the sale of sponge Iron business on 22nd May, 2009 and consolidation of Idea Cellular Limited as an Associate from 1st January, 2009, as against as a JV earlier.

Highlights of Grasim's operations:
Viscose Staple Fibre (VSF) Business
The performance of VSF business has been notable. Capacity utilization stood at 92%. Consequently, Production was up by 22% at 76,669 tons, though the Nagda plant was shut for 8 days during the quarter owing to water shortage.

Signs of revival in the Global Textile Markets augur well for the VSF business.

The Company plans to set up a 80,000 TPA VSF plant at Vilayat (Gujarat) at an estimated investment of Rs.1,000 crores. The Company has already acquired land and received environmental clearances for the project. Upon commissioning of the plant in FY13, Grasim's VSF capacity will stand enhanced at 413,975 tons.

Chemical Plant
The Chemical business' performance was satisfactory. Caustic volumes improved by 11% due to aggressive marketing. Lower ECU realisations emanating from lower caustic and byproduct prices, however, led to lower operating margins. Realisations are expected to remain under pressure due to the commissioning of new capacities and cheap imports. However, the recovery in the economy is expected to translate into better performance of the Business in the long term.


The Company's thrust will be on fortifying its leadership position in the Cement and VSF sectors. Even after the demerger, the Company will continue to provide all support to the Cement business, in the same manner as is being given prior to the demerger.

GRASIM INDUSTRIES LIMITED


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