Grasim - The Stronglomerate: Firing on all the cylinders

• Q2FY22 Consolidated EBITDA up 19% YoY at ₹4,282 Cr.; Standalone EBITDA up 144% YoY at ₹1,504 Cr.
• Q2FY22 Consolidated PAT increases 41% YoY to ₹1359 Cr.
• Sales volume of key businesses touched pre-covid levels
• Successful commissioning of expansions and new product capacities:
  - VSF expansion of 300 TPD (out of total 600 TPD) at Vilayat (Gujarat) (Nov-21)
  - Caustic Soda expansion of 170 TPD Rehla (Jharkhand) (Oct-21)
  - Chloromethane plant of 150 TPD at Vilayat (Gujarat) (Nov-21)
• Paints business acquires five land parcels for plants, basis proximity to consumption hubs

QUARTERLY FINANCIAL RESULTS*

Consolidated revenue for Q2FY22 was up 26% at ₹22,564 Cr., EBITDA was up 19% at ₹4,282 Cr. and PAT* at ₹1,359 Cr. was up 41%, on a YoY basis.

Standalone revenue for Q2FY22 jumped 67% to ₹4,933 Cr., EBITDA soared 144% to ₹1,504 Cr. and PAT* at ₹979 Cr. was up 180%, on a YoY basis.

Revenue and EBITDA from the discontinued operations (Fertiliser Business) for Q2FY22 stood at ₹773 Cr. and ₹50 Cr. (Q2FY21: ₹490 Cr. and ₹60 Cr.) respectively. The Fertiliser Business divestment process is expected to be completed by Q3FY22.

The demand momentum picked up in Q2FY22 and has continued thereafter across all businesses. Backed by strong demand, realisation and volumes have improved in key businesses, offsetting the cost increase.

Viscose Business

The Chinese textile demand was impacted by weak business sentiment in the value chain. The VSF prices in China moderated during the quarter, however, the prices have witnessed a considerable improvement since October’21, driven by drastic operating rate cuts in fibre and yarn manufacturing. The demand for textile products in India witnessed a significant bounce back during Q2FY22 with the onset of the festive season, phased reopening of schools, educational institutions, offices and increased textile sourcing from India by global brands as a part of the China+1 strategy.

The VSF business reported strong operational and financial performance driven by demand momentum and better product mix. The VSF business recorded the highest ever total sales volume with domestic sales volume, back to the pre-pandemic level in Q2FY22. The share of value-added products in the overall sales mix almost doubled YoY to 27%. The VFY sales volume was also the highest ever, with demand recovery driven by inventory liquidation in the value chain and lower imports.

Chemical Business

Caustic soda prices in India recovered from multi-quarter lows supported by the recovery in demand, tightness in supply led by production losses and higher export sales driven by better overseas realisation. The caustic soda capacity utilization stood at 86% in Q2FY22, sequentially higher. The domestic demand for caustic soda was driven by the textile and pulp & paper sectors.

Advanced Material (Epoxy Resins) business witnessed a significant improvement in the operational and financial performance on a YoY basis, driven by better realisation and strong demand. Demand for Advanced Materials in India is expected to remain strong with a pickup in the pace of construction activity, thrust on renewables, and thin inventory across product segments.

Paint Business

The company has already acquired land at 5 locations as part of its pan-India footprint for paints manufacturing. These locations have been identified in different regions, basis proximity to key consumption hubs across India. The process of Environmental Clearance is also underway for various project sites. The contracts for Basic Engineering and Detailed Engineering have been awarded. The Civil work at various sites shall commence post receipt of the Environmental Clearance.

Capex Plan

The company has made considerable progress in its commissioning schedule. VSF brownfield expansion at Vilayat (300 TPD) has been commissioned in November-21, while the second line of 300 TPD will be ready for commissioning in Q3FY22 as planned. In the Chlor-alkali business, Caustic Soda expansion of 170 TPD at Rehla (Jharkhand) and Chloromethane plant of 150 TPD at Vilayat (Gujarat) have also been commissioned in Q3FY22. Additionally, Caustic Soda capacities at BB Puram (200 TPD) and Vilayat Phase I (200 TPD) will be commissioned in H2FY22.

Sustainability

The VSF business retained its #1 ranking in 2021 Canopy Hot Button Report which ranks Global Viscose players on sustainable forestry practices. Grasim ranked 7th among the most sustainable companies in India in the ET Futurescape 8th Sustainability Index Report 2021. The VSF Business (Birla Cellulose) has also joined the Forest Stewardship Council^® (FSC^® C118017) mission to 3 protect the world’s forests by signing the 'Fashion Forever Green Pact' and is committed to promoting MMCFs from FSC^® (FSC^® C118017)-certified sources.

Cement Subsidiary - UltraTech Cement Limited

UltraTech’s Consolidated Revenue was at ₹12,017 Cr. up 16% YoY, EBITDA at ₹2,855 Cr. was up 1% YoY and PAT came in at ₹1,314 Cr. for Q2FY22. The consolidated sales volume stood at ~21.64 MTPA, up 8% YoY.

The Rise in energy, raw material, and logistics costs led to an escalation in input costs during Q2FY22.

UltraTech’s 19.5 MTPA capacity expansion program is on track. In Q2FY22, the company commissioned 0.6 MTPA of capacity each at Patliputra (Bihar) and Dankuni (West Bengal), taking the total capacity to 112.5 MTPA.

UltraTech has committed to Climate Group’s RE100 initiative at Climate Week NYC 2021 to meet 100% of its electricity requirement through renewable sources by 2050.

Financial Services Subsidiary – Aditya Birla Capital Limited (ABCL)

The Consolidated Revenue of Aditya Birla Capital Limited (ABCL) grew 22% to ₹5,593 Cr. and consolidated PAT (after minority interest) grew 43% to ₹377 Cr., on a YoY basis. ABCL’s focus on building scale, growing its retail base and delivering consistent profitability, continues to yield results. The retailisation strategy has led to the active customer base growing to ~ 28 million, a 42% YoY growth.

The NBFC and Housing Finance lending book stood at ₹59,060 Cr. in Q2FY22. The NBFC business reported the highest ever Net Interest Margin (Incl. Fee Income) at 6.23%, up 91 bps YoY, led by growth in retail and SME segments and lower cost of borrowing. The Digital Ecosystem continues to build strong customer acquisition momentum, with over 1.4 million customers acquired in H1FY22. The Digital Ecosystem also contributed ~27% sourcing mix in the quarter within the retail segment.

In Asset Management, the Domestic AAUM increased to ₹3,00,289 Cr. (Q2FY22), up 26% YoY. The PBT/AAUM increased to 30.5 bps in Q2FY22 from 27.3 bps in Q2FY21.

In Life Insurance, Individual First Year Premium (FYP)** grew 27% YoY to ₹553 Cr., Total Premium grew 24% YoY, to ₹4,921 Cr. in Q2FY22.

In the Health Insurance business, the gross written premium for Q2FY22 increased to ₹396 Cr., up 30% YoY. 12 out of the 16 million lives covered by the business, are through micro and byte size products.

About Grasim Industries Limited

Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks amongst the top publicly listed companies in India. Grasim is celebrating 75 glorious years of its existence. Incorporated in 1947, it started as a textiles manufacturer in India. Today, it has evolved into a leading diversified player with leadership presence across many sectors. It is a leading global producer of Viscose Staple Fibre and Viscose Filament Yarn, the largest Chlor-Alkali and Linen Yarn and Fabrics producer in India. Through its subsidiaries, UltraTech Cement and Aditya Birla Capital, it is also India’s largest cement producer and a leading diversified financial services player. At Grasim, there is an endeavour to create sustainable value for 23,500+ employees, 222,000+ shareholders, society, and customers. The company reported consolidated net revenue of ₹76,398 Cr. and EBITDA of ₹15,766 Cr. in FY 2021.

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.