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Thursday October 23, 06:08 PM
Grasim, The Aditya Birla Group’s Flagship Company Performance for Q2FY2009 |
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Mumbai, Maharashtra, India, Thursday, October 23, 2008 -- (Business Wire India) -- Grasim, an Aditya Birla Group Company, today announced its results for the 2nd quarter ended 30th September, 2008. Its Consolidated Revenues stood at Rs.4,489 crores (Rs.3,964 crores). Net Profit was lower at Rs.486 crores (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.
Viscose Staple Fibre (VSF) Business
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.
The long-term outlook for the VSF business is positive.
Chemical Plant
The Chemical plant posted good performance. Higher demand from end user industries saw Caustic soda volumes improving by 7%. ECU realisations were up by 18%, driven by strong caustic prices. Margins were maintained despite the steep increase in the cost of key inputs and power. ECU realisations are expected to be under pressure, mainly due to the downward trend in the prices of chlorine and HCL (HCLL.BO, news) .
Cement Business
In the Cement business, Sales volumes registered an increase of 3%, while Production was marginally higher. The RMC business recorded an impressive growth aided by the network expansion. The sharp escalation in prices of coal and raw materials and higher freight costs impacted margins adversely.
Cement Subsidiary
The performance of UltraTech Cement Limited, a subsidiary of Grasim, was subdued. The sharp increase in prices of coal and raw materials resulted in variable costs rising by 37%. The combined sales of cement and clinker reflected a growth of 13%. Net Profit was lower by 9% at Rs.167 crores.
Cement Capex plan
The Company’s expansions at Shambhupura and Kotputli in Rajasthan are progressing satisfactorily. At Shambhupura, the production of clinker has commenced. The grinding unit at Dadri also became operational. The grinding unit at Shambhupura and the greenfield plant at Kotputli are expected to be operational in Q4FY09.
The slowdown being witnessed by the real estate and infrastructure sectors has resulted in slackening of demand for cement. The price of cement may come under pressure from CY 2009 owing to the bunching of capacity expansions expected in FY10 and FY11. While the price of imported coal has registered a fall of late, the expected benefit in energy cost will be partially offset by the falling value of the rupee. Going forward, Grasim’s new capacities shall ease its capacity constraint, lead to volume growth and improvement in operating profit.
Outlook
The Company’s thrust will be on fortifying its leadership position in the VSF and Cement sectors. Cost optimization and maximization of asset productivity will continue to the Company’s hallmarks. The prospects for the Company remain positive.
To view the press release with tables and Results, please click on the links given below:
Press Release with Tables
Unaudited Financial Results
Media contact details
Dr. Pragnya Ram, Group Executive President - Corporate Communications,
Aditya Birla Management Corpn. Private Ltd,
+91 (022) 6652 5160,
pragnya.ram@adityabirla.com
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