Grasim Industries, an Aditya Birla Group company, has reported that its net profit in the second quarter of this fiscal has risen 29 per cent on a consolidated basis to Rs 418 crore (Rs 323 crore) on the back of improved demand for Viscose Staple Fibre (VSF). Sales were up 27 per cent to Rs 5,649 crore (Rs 4,444 crore).

Global fibre markets have stabilised after sharp volatility witnessed in the first quarter of this fiscal. The demand for VSF picked up due to improved consumption and restoration of the depleted inventory in the value chain, said the company in a press release on Saturday.

Marginal recovery

Globally, VSF prices staged a marginal recovery with improvement in sentiments. Despite higher input costs, the fibre business recorded a better performance. Production grew by 20 per cent 83,516 tonnes (69,802 tonnes) with full capacity utilisation at Nagda plant, which faced a shut down for 25 days in the corresponding quarter last year. Sales volumes were up by 17 per cent to 78,959 tonnes (67,488 tonnes). However, the performance of the pulp units was impacted by higher energy cost and scheduled annual maintenance.

The chemical business reported 21 per cent increase in production on the back of full capacity utilisation. Sales volume increased by 30 per cent. Caustic prices moved up following higher international prices and lower imports.

The demand for VSF is expected to be volatile due to macro economic conditions and uncertainties in the Euro zone, Grasim said. In cement, the surplus supply situation and rising input costs will result in squeezing margins, it added.

Grasim will benefit through its backward integration and cost leadership in its VSF business once the present situation improves. Capacity expansions under implementation will enable the company to grow at a rapid pace and consolidate its leadership even further, the company said.

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