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Grasim sees strong growth in Q2 FY 2006

28 Oct '05

3 min read

Leading textile firm Grasim Industries Limited has posted good performance during the quarter ended 30 September 2005. Consolidated revenues were Rs.2,328 crore (Rs.2,222 crore). Net profit was Rs.200 crore (Rs.215 crore).

Two factors have had an adverse impact on the Q2 performance - firstly, the subdued performance by its sponge Iron business due to the non-availability of natural gas and high feedstock cost, and secondly, the floods in Gujarat which affected its subsidiary, UltraTech Cement Limited, in a major way.

However, the company has posted an improved performance for the first six months of the current financial year, with the net profit rising by 17 per cent to Rs.497 crore (Rs.424 crore).

The company's stand-alone results for the quarter have been satisfactory, despite the downturn faced by two of its major businesses, viz., viscose staple fibre and sponge iron. Revenues for the quarter were at Rs.1,639 crore (Rs.1,534 crore) while net profit for the same period was at Rs.188 crore (Rs.220 crore).

The company has been able to maintain its performance for the first half of the current year, despite the challenges faced by its two major businesses. While revenues were higher by 5 per cent at Rs.3,192 crore (Rs.3,051 crore), net profit was maintained at Rs.439 crore (Rs.439 crore).

The company took a conscious decision of scaling down its production, primarily to reduce inventory. This, coupled with the closure of the Nagda plant for eight days due to delayed monsoons, resulted in capacity utilisation being lower at 79 per cent as against 97 per cent in the corresponding quarter. Sales volumes were, however, up by 4 per cent YoY.

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