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PRESS
RELEASE
22
January 2010
Grasim
reports excellent performance for Q3 FY2010
Click
here to view the results
| Consolidated
net profit |
Rs.715crore
|
 56% |
| Consolidated
net revenue |
Rs.4,844crore
|
5% |
Consolidated
financial performance
|
|
Quarter
ended
|
9
months ended
|
| |
31.12.09
|
31.12.08
|
%
change
|
31.12.09
|
31.12.08
|
%
change
|
|
Net
revenue
|
4,844
|
4,610
|
5
|
14,715
|
13,549
|
9
|
|
PBIDT
|
1,511
|
1,073
|
41
|
4,822
|
3,452
|
40
|
|
Profit
before taxes
|
1,177
|
749
|
57
|
3,840
|
2,576
|
49
|
|
Profit
after taxes
(before extraordinary item)
|
805
|
566
|
42
|
2,632
|
1,921
|
37
|
|
Minority
share
|
(90)
|
(106)
|
|
(392)
|
(303)
|
|
|
Net
profit
(before extraordinary item)
|
715
|
460
|
56
|
2,240
|
1,618
|
38
|
|
Net
profit
(after extraordinary item)
|
715
|
460
|
56
|
2,576
|
1,618
|
59
|
|
EPS
(Rs.)
|
|
Before
extraordinary item
|
78
|
50
|
56
|
244
|
176
|
38
|
|
After
extraordinary item
|
78
|
50
|
56
|
281
|
176
|
59
|
Grasim Industries Limited, an Aditya Birla Group company, today
announced its results for the third quarter ended 31 December
2009. Higher volumes and lower input prices have been the key
growth drivers.
The company’s
net revenue was higher by 5% at Rs.4,844 crore. PBIDT was
higher by 41% at Rs.1,511 crore. Net profit at Rs.715 crore
was up by 56%, despite higher depreciation on account of the
commissioning of new projects and a substantially higher tax
provision.
On a standalone
basis, Grasim’s performance has been more impressive.
Net revenue rose by 15% at Rs.3,088 crore (Rs.2,695 crore).
PBIDT grew by 85% at Rs.1,075 crore (Rs.580 crore). Net profit
increased by 81% at Rs.596 crore (Rs.330 crore), notwithstanding
a steep rise in tax expenses and higher depreciation due to
the commissioning of new projects.
The consolidated
as well as the standalone results for the quarter are not
strictly comparable with the results of the corresponding
quarter. This is due to the sale of the sponge iron business
on 22 May 2009 and the consolidation of Idea Cellular Limited
as an associate from 1 January 2009, as against a JV earlier.
On a comparable
basis, excluding the sponge iron business from Q3FY09 and
the consolidation of Idea as an associate in Q3FY09, the results
for the current quarter would have been as indicated below:
| Net
revenue |
Increase
by 29% on a standalone basis and by 16% on a consolidated
basis |
Net
profit
(before extraordinary item)
|
Increase
by 97% on a standalone basis and by 65% on a consolidated
basis |
Highlights
of Grasim’s operations:
| Products |
Production
|
Sales
|
|
Q3
FY10
|
Q3
FY09
|
%
change
|
Q3
FY10
|
Q3
FY09
|
%
change
|
Cement
(consolidated)
|
Mn. Mt |
8.99
|
7.99
|
13
|
9.21
|
8.08
|
14
|
White
cement
|
Mt |
137,523
|
112,413
|
22
|
130,188
|
109,972
|
18
|
Viscose staple fibre
|
Mt |
81,991
|
51,777
|
58
|
81,306
|
53,758
|
51
|
Cement
business
The cement business posted a healthy growth, as demand continued
to remain strong. New capacities contributed to a 13% increase
in production, at 8.99 million tons. Sales volumes expanded
by 14% at 9.21 million tons. Cement prices were impacted, particularly
in the south, due to excess capacity and lower demand. The quarter
also witnessed a drop in clinker export realisation due to reduced
off-take in the Middle East following a meltdown in construction
activities. On a sequential basis, RMC (Ready Mix Concrete)
volumes improved marginally.
In white
cement, sales volumes were up by 18%. Wallcare putty recorded
a 38% growth in volumes.
Higher
volumes, coupled with lower energy prices and an enhanced
share of captive thermal power, resulted in improved operating
margins.
Cement
capex
The company commissioned a cement mill of 1.55 millions capacity
at Kotputli (Rajasthan) in January 2010. The second cement mill
of equivalent capacity is expected to be commissioned in February
2010. This would raise the combined cement capacity of the company
to 48.8 million tons.
A total
capital outlay of Rs.4,110 crore has been earmarked for the
cement business (including an outlay of Rs.2,040 crore for
its subsidiary, UltraTech Cement Limited). The amount is proposed
to be invested on grinding and evacuation facility, logistics
infrastructure, waste heat recovery system, captive thermal
power plant, modernisation and completion of existing projects.
Cement
outlook
Industry demand is likely to grow by over 10%, driven by the
robust growth in the Indian economy and the government’s
initiatives to boost rural development, infrastructure and
housing. The industry is expected to witness a surplus scenario
over the next 18 to 24 months which may put pressure on margins.
The company’s focus on higher volume growth, together
with cost efficiency, should help in mitigating the impact
on margins to some extent.
The company
would require an additional capacity of around 25 million
tons over the next 5 years just to retain its market share.
It plans to expand its capacity sizeably, with a view to grow
its market share.
Viscose
staple fibre (VSF) business
The VSF business turned in a good performance. Partial revival
of consumer spending on textiles with the global economic recovery,
had a positive impact on the entire textile value chain.
Production
was up by 58%, as demand grew and capacity utilisation was
higher at 98%. During the corresponding quarter, the business
was impacted due to the global economic downturn. Operating
margin improved due to better economies of scale, higher realisation
and lower input prices.
The company
plans to set up a 80,000 TPA VSF plant at Vilayat (Gujarat)
at an estimated outlay of Rs.1,000 crore. The land for the
project has already been acquired. The environmental clearances
too are in place. The project is likely to be commissioned
in FY13. The capacity of the overseas joint venture at China
is expected to double from 35,000 TPA to 70,000 TPA by March
2010.
The demand
outlook is expected to be stable in the short to medium term.
However, the upward trend in the prices of pulp and sulphur
may lead to a decline in the operating margin.
Chemical
plant
The performance of the chemical business was satisfactory. Caustic
volumes grew by 12% mainly on account of higher captive use.
ECU realisation was lower by 20% due to depressed caustic prices.
Prices are expected to remain under pressure due to the commissioning
of new capacities and cheap imports. However, the global economic
recovery may improve the performance of the business in the
long term.
Cement restructuring
The proposed demerger of the cement business of the company
into Samruddhi Cement Limited (“Samruddhi”), which
will be effective from 1 October 2009, is progressing as scheduled.
It is targeted to be completed by March 2010.
Meanwhile,
the Boards of Directors of UltraTech and Samruddhi have decided
to amalgamate Samruddhi with UltraTech under a Scheme of Amalgamation
with effect from 1 July 2010. This Scheme too is in line as
scheduled and is aimed to be completed by July 2010.
As the demerger
is yet to become effective, pending sanction of the Hon'ble
High Courts of Madhya Pradesh and Gujarat, no effect of the
proposed demerger has been factored in the results. Had the
Scheme been effective, the revenue and profit for the period
would have stood as under:
|
Rs.
crore
|
For
the quarter ended 31 December 2009
|
Standalone
|
Consolidated
|
|
Published
|
Restated
|
Published
|
Restated
|
Revenue
|
3,088
|
1,058
|
4,844
|
4,844
|
Profit
before interest and tax (PBIT)
|
932
|
432
|
1,256
|
1,256
|
Net profit before extraordinary item (after minority share
in consolidated results)
|
596
|
358
|
715
|
676
|
Outlook
Both the core businesses of the company have strong competitive
advantages and have attained a global size. They now stand at
the next phase of growth. With the current phase of restructuring,
the stage for future growth has been set. The company will continue
to make investments in these two businesses to enhance cost
and volume leadership. On restructuring, while the cement business
will be consolidated in a pure play company, Grasim at the consolidated
level will continue to be a cement and VSF major.
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