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PRESS
RELEASE
20
May 2010
Grasim
reports excellent performance for Q4 FY2010
Click
here to view the results
| Consolidated
net revenue |
Rs.5,475
crore |
 11% |
| Consolidated
net profit as reported |
Rs.654
crore |
15% |
| Like
to Like |
Rs.763
crore |
34% |
Consolidated
Financial Performance:
Grasim Industries Limited, an Aditya Birla Group Company, has
reported improved performance during the fourth quarter of the
year ended 31 March 2010, as well as the entire year. These
results are given after considering the effect of the demerger
of the cement business of the Company to its subsidiary, Samruddhi
Cement Ltd. (SCL), w.e.f. 1 October 2009.
The results have been driven by improvement in both its cement
and VSF businesses. While the cement business has performed
well supported by higher output from the new capacities including
its captive power plants, the VSF business has recovered from
the extreme downturn of the last year leading to an impressive
performance.
Consolidated
financial performance
|
|
Quarter
ended
|
Year
ended
|
| |
31.03.10
|
31.03.09
|
%
change
|
31.03.10
|
31.03.09
|
%
change
|
|
Net
Revenue
|
5,475
|
4,942
|
115
|
20,195
|
18,496
|
9
|
|
PBIDT
|
1,500
|
1,327
|
13
|
6,322
|
4,779
|
32
|
|
Net
Profit
(Before Extraordinary Item)
|
654
|
569
|
15
|
2,760
|
2,187
|
26
|
|
Extraordinary
Item
|
-
|
-
|
-
|
336
|
-
|
-
|
|
Net
profit
After Extraordinary Item)
|
654
|
569
|
15
|
3,096
|
2,187
|
42
|
|
Net
Profit (Re-casted) *
|
763
|
569
|
34
|
3,339
|
2,187
|
53
|
|
EPS
(Rs.)
|
|
Before
Extraordinary item
|
71
|
62
|
15
|
301
|
238
|
26
|
|
After
Extraordinary item
|
71
|
62
|
15
|
337
|
238
|
42
|
* a) Due to demerger of the cement business w.e.f 1
October 2009, the net profit after minority share has reduced
by Rs.108 crore in Q4 FY10 and by Rs.243 crore in FY10. This
is on account of the differential tax treatment of Rs.27 crore
in FY10 and minority share (35%) of SCL (being shares to be
issued to Grasim’s shareholders in terms of the demerger
scheme). Adding these, the total net profit was higher at Rs.763
crore for the quarter (growth of 34%) and at Rs.3,339 crore
for the year (growth of 53%).
There is no change in the consolidated revenue and operating
profit of the Company on account of the demerger of its cement
business.
b) The extraordinary
item of Rs.336 crore reflects the profit on the sale
of Vikram Ispat, the sponge iron unit of the Company.
Dividend
The board of directors of Grasim has recommended a dividend
of Rs.30 per share, which is the same as per last year. Additionally,
the board of directors of SCL, has proposed a dividend of Rs.1.75
per share for six months’ working. Each Grasim shareholder
will be receiving one equity share of Rs.5 in SCL for every
one share
held in Grasim on 28 May 2010, the record date fixed for this
purpose, in terms of the demerger scheme.
Highlights
of Grasim’s Consolidated operations:
| |
|
|
|
Q4
FY10
|
Q4
FY09
|
%
change
|
FY 2010
|
FY 2009
|
%
change
|
| Production
- |
|
|
|
|
|
|
|
Cement
(consolidated)
|
Mn. M.T. |
10.24
|
9.28
|
10%
|
37.02
|
32.18
|
15%
|
White
cement
|
M.T.
|
138,893
|
132,060
|
5%
|
514,291
|
441,118
|
17%
|
Viscose
Staple Fibre
|
M.T. |
81,081
|
59,913
|
35%
|
302,092
|
232,745
|
30%
|
Sales
Volumes -
|
|
Cement
(Consolidated)
|
Mn.M.T. |
10.36
|
9.52
|
9%
|
37.29
|
32.66
|
14%
|
White
cement
|
M.T. |
142,984
|
129,757
|
10%
|
509,054
|
438,394
|
16%
|
Viscose staple fibre
|
M.T. |
85,714
|
65,409
|
31%
|
308,431
|
238,463
|
29%
|
Cement
Business
New capacities and a strong demand have led to an increase of
9% in cement volumes in Q4FY10. The realisations were lower
on YoY basis, particularly in the Southern region, due to the
muted demand growth and bunching of new capacities.The price
fall in South was arrested in Q4FY10.
In White Cement, sales volumes were up by 10%.
Operating margins for the quarter were impacted, consequent
to a dip in realisations and higher input cost.
During the year gone by, cement volumes grew by 14%, vis-à-vis’
the sector growth of 11%. Lower energy prices and a greater
share of captive thermal power translated into higher operating
margins.
Cement
Capex
The 3.1 million tonnes grinding unit at Kotputli (Rajasthan)
became operational during the quarter. The combined cement capacity
of the Company now stands raised to 48.8 million tonnes.
A total capital outlay of Rs.4,475 crores has been earmarked
for the cement business. The investment would largely be towards
augmentation of the grinding and evacuation facility, logistics
infrastructure, waste heat recovery system, captive thermal
power plant, modernisation and completion of existing projects.
The Company would require an additional capacity of around 25
million tonnes over the next five years just to retain its market
share. It plans to expand its capacity sizably, to grow its
market share.
The Company
is examining various options and has a target to start brownfield
expansions of 10 million tonnes latest by Q4FY11 after the completion
of the detailed study.
Cement
Outlook
Industry demand is likely to grow by over 10%. The Indian
economy will continue its strong growth trajectory and drive
the demand for cement. Accelerated spending on infrastructure
and strong growth in the housing segment will continue to
propel demand. New capacities commissioned during FY10 are
at various stages of ramp up.
The industry may witness a surplus scenario after the peak
demand in Q1FY11 which may last over the next six to eight
quarters. Higher coal prices are likely to exert pressure
on margins. The Company’s focus on higher volume growth,
better transport and logistics support together with cost
efficiency, should help in partially mitigating the impact.
Viscose
Staple Fibre (VSF) business
VSF business has reported an excellent performance on the
back of higher volumes and realisation.
Production was up by 35% during the quarter, supported by
additional volumes from the new capacity installed at Kharach
towards the end of FY08. Sales volumes were up by 31%. While
in the corresponding quarter, the business was impacted due
to the global economic downturn, this quarter saw an improvement
in operating margins, given better realisation and higher
economies of scale.
Captive facilities and long-term contracts have helped in
containing the rise in the cost of inputs, which resulted
in increase in the margins and profits for the year under
review.
As informed earlier, 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 project is likely to be commissioned
in FY13. The capacity of the overseas joint venture at China
will double from 35,000 TPA to 70,000 TPA by the end of Q1FY11.
The demand outlook is expected to be stable in the short to
medium term. However, high VSF prices may lead to substitution
with the other competing fibres, thereby impacting volumes
and margins. The upward trend in the prices of input costs,
mainly pulp, with limited opportunity to pass on the same
to customers, may lead to a fall in the operating margin.
Chemical
Business
The performance of the chemical business was satisfactory. Caustic
volumes grew by 15% on higher demand from the end-user industry.
Depressed caustic prices have lowered ECU realization by 20%.
Prices are expected to remain under pressure due to the commissioning
of new capacities and cheap imports. However, a gradual price
recovery is expected with improvement in global markets.
Stand-alone
Results
Stand-alone results also are impressive with better performance
of VSF and cement businesses.
|
Rs.
crore
|
|
Quarter
ended
|
Year
ended
|
|
31.03.09
|
31.03.10
(Before
demerger)
|
%
Change |
31.03.10
*
(As Reported,after demergerof cement w.e.f
01.10.09) |
31.03.09
|
31.03.10
(Before
demerger)
|
%
Change |
31.03.10
*
(As Reported,after demergerof cement w.e.f
01.10.09) |
Net
Revenue
|
2,940
|
3,437
|
17
|
1,141
|
10,965
|
12,641
|
15
|
8,313
|
PBIDT
|
753
|
1,036
|
38
|
396
|
2,844
|
4,217
|
48
|
2,972
|
Net Profit
(Before Extraordinary Item)
|
385
|
603
|
57
|
289
|
1,648
|
2,404
|
46
|
1,756
|
Net
Profit
(After Extraordinary Item) |
385
|
603
|
57
|
289
|
1,648
|
2,740
|
66
|
2,092
|
* The reported results are not comparable since cement business
has been demerged w.e.f. 01.10.09 whereas FY09 had cement numbers
for the full year. Hence numbers without giving impact of demerger
are also given for better comparison.
Cement Restructuring
The scheme of amalgamation between UltraTech Cement Limited
and SCL is progressing as scheduled. The shareholders and creditors
of UltraTech have given their approval to the scheme on 19 March
2010. The merger is expected to be completed by July 2010.
Outlook
The Company enjoys a leadership position in both of its businesses,
viz., cement and VSF, with strong competitive advantages and
global size. They now stand at the cusp of the next phase of
growth. The Company will continue to make investments in these
two businesses to consolidate its leadership position. The
Company’s strong balance sheet will support its ambitious
growth plans. 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.
Appointment
In the board meeting held today, the board has appointed Mr.
K.K. Maheshwari as the Whole-Time Director of the Company.
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.
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