Grasim reports improved performance for Q2FY12

1st November, 2011

22 October 2011

Grasim reports improved performance for Q2FY12

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  Rs. in crore
Consolidated net revenue 5,77428 %
Consolidated net profit 41829 %
Capex under implementation  
  VSF and allied chemicals 3,400
  Cement 11,000

Consolidated financial performance:
Grasim Industries Limited, an Aditya Birla Group Company, has reported good results for the 2nd quarter ended 30th September 2011 supported by improved performance of both Cement and VSF businesses. Net Revenue increased by 28 per cent at Rs.5,774 crore (Rs.4,503 crore). PBIDT grew by 28 per cent from Rs.884 crore to Rs.1,135 crore. Net profit rose by 29 per cent at Rs.418 crore (Rs.323 crore).

Production and sales volumes:

Products   Production Sales
  Q2FY12 Q2FY11 Per cent change Q2FY12 Q2FY11 Per cent change
Viscose staple fibre M.T. 83,516 69,802 20 78,959 67,488 17
Cement (consolidated)* Mn M.T. 9.51 8.61 11 9.76 8.96 9
White cement Lakh M.T. 1.38 1.09 26 1.34 1.23 8
*Including Star Cement volumes in Q2 FY12

Viscose Staple Fibre (VSF)
Global fibre markets are stabilising after the sharp volatility witnessed in Q1. The demand for VSF picked up due to improved consumption and restoration of the depleted inventory in the value chain. Globally, VSF prices staged a marginal recovery with improvement in sentiments.

The business recorded improved performance despite higher input costs. Production grew by 20 per cent with full capacity utilisation at Nagda plant during the quarter which was shut for 25 days in the corresponding quarter. Sales volumes were up by 17 per cent supported by the market demand.

The performance of the Pulp units was impacted by higher energy cost, scheduled annual maintenance and nominal forex losses.

Cement Subsidiary (UltraTech Cement)
UltraTech recorded Revenue of Rs.4,209 crore and PAT of Rs.265 crore. Performance has improved on year-on-year basis on account of an unrealistic lower base effect. On a sequential basis the company’s performance was subdued on account of seasonal impact, lower realisation and substantial increase in costs.

Variable cost rose by 14 per cent mainly on account of increase in input and energy costs. The 30 per cent increase in the price of domestic coal, continuous rise in prices of imported coal together with increase in freight costs on account of the diesel price hike have adversely impacted the company’s performance.

Chemical Business
The Chemical business has reported an excellent performance. Production grew by 21 per cent on the back of full capacity utilisation. Sales volume increased by 30 per cent. Caustic prices continued to move upward with higher international prices and lower imports. As a result ECU realization increased by 24 per cent.

Standalone Financial Performance
The standalone results for the quarter displayed all round growth with Net Revenue and Net Profit higher by 30 per cent and 23 per cent respectively.

Rs. crore
  Quarter ended Percent change
  30.09.11 30.09.10
Net revenue 1,249 963 30
PBIDT 506 426 19
Net profit 345 280 23

VSF & Chemical Capex
The progress on 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 is on track. Civil work is in full swing. Both 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. This comprises of Rs.2,850 crore for expansion projects and Rs.550 crore towards modernisation.

Cement Capex
A total capex of Rs.11,000 crore has been slated for the Cement business with Rs.5,150 crore on expansion projects and Rs.5,850 crore towards instituting bulk packaging terminals, setting up of ready-mix concrete plants, captive thermal power plant, and modernization projects.

Chhattisgarh and Karnataka brownfield expansion projects aggregating 9.2 million TPA, are progressing as per schedule. Both these projects are expected to be operational by Q1FY14.

The environment in both the businesses continues to be challenging. In VSF, the demand is expected to be volatile due to macro economic conditions and the uncertainties in the Euro Zone. In Cement, the surplus scenario should subside gradually over a period of 2-3 years with expected growth in demand. At the same time, if the present rising input costs scenario continues, it will result in a squeeze of margins.

Cautionary Statement
Statements in this “Press Release” describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities law and regulations. Actual results could differ materially from those express or implied. Important factors that could make a difference to the Company’s operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.

For more information, contact:
Dr. Pragnya Ram
Group Executive President
Corporate Communications & CSR
Aditya Birla Management Corporation Private Limited
Tel: 91-22-6652 5000 / 2499 5000
Fax: 91-22-6652 5741/ 42

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