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Mumbai, July 25 Grasim Industries, an Aditya Birla flagship company, has reported a flat growth 0.49 per cent rise in net profit at Rs 514 crore in the first quarter ended June 30, 2008 against Rs 512 crore in the same period last year. Total income rose 6.84 per cent to Rs 2,674 crore (Rs 2,503 crore).

On a consolidated basis, profit after tax but before the minority share of Rs 120 crore (Rs 130 crore) was marginally down by one per cent at Rs 792 crore (Rs 800 crore). The net profit was up 0.30 per cent at Rs 672 crore (Rs 670 crore). Income increased nine per cent to Rs 4,524 crore (Rs 4,147 crore).

The Viscose Staple Fibre (VSF) business performance during the quarter was muted. Besides the slowdown in the economy, high VSF prices forced the industry to look for substitutes. Margins were depressed due to increase in prices of sulphur and other key inputs such as pulp and caustic.

“Margins are likely to remain under pressure in the short to medium term, owing to escalating input prices. 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 company said.

Cement business posted a moderate performance. Production was up by three per cent at 3.99 million tonnes. Sales volumes were marginally high at 3.97 million tonnes. Volumes in RMC (ready mix concrete) 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,” the company said.

Caustic soda volumes were up by 11 per cent at 47,800 tonnes. Realisations grew by 30 per cent at Rs 22,352 a tonne.

More Stories on : Financial Performance | Diversified | Grasim Industries Ltd

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