The Hindu Business Line : Grasim clocks 15 pc increase in first quarter net profit

BETTER realisations from Grasim Industries' chemicals and cement divisions during the first quarter of this fiscal helped neutralise a downturn in the company's viscose staple fibre (VSF) and sponge iron businesses.

Grasim Industries has reported a 15 per cent increase in net profit for the quarter ended June 30, 2005; net profit rose to Rs 251 crore, up from Rs 219 crore in the corresponding year-ago period.

Revenues for the quarter, at Rs 1,553 crore, were up by a modest 2 per cent.

Net realisations from the company's VSF business fell by 5 per cent. Sponge iron recorded a 12 per cent growth in realisations but volumes were lower by 22 per cent.

Both realisations and sales in cement were up by 4 per cent and 10 per cent respectively. The chemical business showed a surge in realisations, of 52 per cent, though sales volumes showed a marginal decline.

On a consolidated basis, Grasim Industries has reported a 41.8 per cent increase in its net profit, which was at Rs 296 crore, up from Rs 208 crore during the corresponding quarter of the previous fiscal (restated after adjusting for incorporation of UltraTech).

This was due to not only the performance of the chemicals and cement divisions of Grasim but also that of all its cement subsidiaries, said a news release from the company.

Consolidated net revenues at Rs 2,495 crore (Rs 2,302.9 crore) rose by 8.4 per cent. Gross profit showed a 13.2 per cent increase. Total tax expenses at Rs 119.7 crore, showed a decline of 37.9 per cent.

UltraTech, the cement division that Grasim acquired from L&T, has shown realisations increase of 4 per cent. Net profit after tax was recorded at Rs 60 crore. Exports from this division rose 118 per cent, from 1.9 lakh tonnes to 4.15 lakh tonnes — the company switching to a product mix of increased cement as against clinker led to improved performance.

Cement prices are expected to firm up, and volumes are doing well too despite the monsoons, said Mr D.D. Rathi, Whole-Time Director, Grasim Industries.

The VSF business, which has been subdued, reflecting the global scenario, and the sponge iron business, impacted by scrap iron import at lower prices, are expected to follow more or less the same trends in the next quarter.

Grasim has embarked on a capacity expansion and modernisation project at its VSF plants, the outlay for which is Rs 533 crore.

UltraTech has a capital expenditure plan of Rs 984 crore, largely towards setting up new power plants, de-bottlenecking and modernisation.

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