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PRESS
RELEASE
25
July 2008
Grasim
announces results for Q1 FY 2009
Click
here to view the results
|
Rs.
crores
|
| Consolidated
net profit |
672
|
| Consolidated
net revenues |
4,430
|
Consolidated Financial Performance
|
Rs.
crores
|
|
Q1
FY09
|
Q1
FY08
|
Per cent
change
|
| Net
revenue |
4,430
|
4,060
|
9
|
| Profit
before taxes |
1,090
|
1,155
|
-
6
|
| Profit
after taxes |
792
|
800
|
-
1
|
| Minority
share |
(120)
|
(130)
|
-
|
| Net
profit |
672
|
670
|
-
|
| EPS (Rs.) |
73
|
73
|
-
|
Grasim, an Aditya Birla Group company, today announced its results
for the quarter ended 30 June 2008. The company’s revenues
for the quarter were at Rs. 4,430 crore (Rs. 4,060 crore). Net
profit was marginally higher at Rs. 672 crore (Rs. 670 crore).
Viewed in the context of the general slowdown of economy and
spiralling prices of key inputs, the performance has been satisfactory.
Highlights
of Grasim’s operations:
|
|
Q1
FY09
|
Q1
FY08
|
Per
cent
change
|
| Production |
| Viscose
staple fibre |
M.T. |
58,083
|
68,555
|
-
15
|
| Cement |
Mn.
M.T. |
3.99
|
3.86
|
3
|
| White
cement |
M.T. |
94,323
|
92,594
|
2
|
| Sponge
iron |
M.T. |
100,532
|
138,136
|
-
27
|
| Caustic
soda |
M.T. |
47,084
|
42,843
|
10
|
| Sales
volumes |
| Viscose
staple fibre |
M.T. |
56,760
|
69,396
|
-
18
|
| Cement |
Mn.
M.T. |
3.97
|
3.90
|
2
|
| White
cement |
M.T. |
92,067
|
85,005
|
8
|
| Sponge
iron |
M.T. |
91,206
|
139,706
|
-
35
|
| Caustic
soda |
M.T. |
47,800
|
42,872
|
11
|
Viscose
Staple Fibre (VSF) business
The VSF business performance during the quarter was muted. Production
was curtailed due to lower off-take. The liquidation of accumulated
inventory in the value chain, substitution of VSF with other
fibres on account of high VSF prices and general slowdown of
the economy impacted the performance. Margins were depressed
due to the record increase in sulphur prices and higher prices
of other key inputs like pulp and caustic.
Margins
are likely to remain under pressure in the short to medium
term, owing to the escalating prices of key inputs. The demand
for VSF is expected to remain subdued in the short term until
the inventory in the pipeline gets liquidated and re-substitution
sets in with increasing prices of cotton and polyester staple
fibre. The business will continue its focus on value added
products and market enlargement through promotion of specialty
fibres, both in domestic and export markets. The long-term
outlook for VSF business is positive, given the growing preference
for comfort fabrics due to global warming.
Chemical
plant
The chemical plant posted an improved performance. Caustic
soda volumes were higher by 11per cent at 47,800 tons. Realisations
grew by 30 per cent at Rs. 22,352 per ton. The outlook for
chemical business appears to be good, given the higher demand
from user industry and expected strengthening of international
prices.
Cement
business
The company’s cement business posted a moderate performance.
Production increased by 3 per cent at 3.99 million tons. Sales
volumes were marginally higher at 3.97 million tons. Volumes
in RMC business grew by 61 per cent due to the commissioning
of new plants. The continuous rise in coal prices along with
higher freight, employee and packing costs has led to a decline
in operating margins.
Cement subsidiary
The performance of UltraTech Cement Limited (UltraTech), a
subsidiary of Grasim, improved marginally. Domestic cement
sales were higher by 4 per cent at 3.81 million tons. Exports
were affected on account of the ban imposed by the government
for six weeks during the quarter. Net profit remained flat
at Rs. 261 crore.
Cement Capex plan
The expansions at Shambhupura, Rajasthan (of Grasim) and at
Tadpatri, Andhra Pradesh (of UltraTech) are expected to be
operational in Q2FY09, while that at Kotputli, Rajasthan (of
Grasim) should go on stream in Q4FY09. Post expansion, the
Company’s aggregate cement capacity will stand augmented
at 48.8 million tons.
The escalation
in fuel prices and bunching of capacity expected in the next
couple of years, based on announced plans of the industry,
are expected to impact the margins of the company’s cement
business. However, the additional volumes arising from the
new capacities, which will become operational during the current
year, should compensate for the decline in margins. Further,
the impetus on development of infrastructure by the government
should bode well for the company’s cement business in
the long term.
Sponge
iron business
The production of sponge iron was lower by 27 per cent during
the quarter on account of the planned maintenance shutdown.
As a result, sales volumes declined by 35 per cent at 91,206
tons. Realisations led by the substantial rise in global scrap
prices, were higher by 62 per cent at Rs. 24,027 per ton, leading
to higher operating profit.
The board
of directors of the company had, at its meeting held in June
2008, approved the sale/transfer of the sponge iron business
on a slump sale basis. The divestment would be done under
a court approved scheme of arrangement under Sections 391-394
of the Companies Act, 1956.
Outlook
The company will continue to fortify its leadership position
in the VSF and cement sectors. With substantial increase in
capacities, improved cost optimisation, higher productivity
and strong fundamentals, the prospects for the company continue
to be positive.
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