Companies

Grasim Industries Q3 profit falls 9.39% to ₹1,040 crore

Our Bureau Mumbai | Updated on February 10, 2020 Published on February 10, 2020

Aditya Birla Group firm Grasim Industries Ltd reported a 9.39 per cent decline in consolidated net profit at ₹1,039.91 crore for the third quarter ended December compared to a net profit of ₹1,147.80 crore during the same quarter of the previous fiscal.

“This quarter’s profitability was impacted primarily by the drop in the domestic viscose staple fibre (VSF) prices, on the back of weakening global prices owing to large supply surplus triggered by new capacity additions in Asia in last one year and global demand slowdown caused by US-China trade war,” the company said in a statement.

“The reduction in the domestic VSF prices was accelerated to counter surge in cheap yarn imports from China/Indonesia which impacted viability of Indian spinners. The domestic VSF prices may witness some improvement in the near term with improving sentiments post phase-1 of US-China trade deal and near-term global supply constraints from China,” it added.

Total income during the quarter under review fell 1.17 per cent to ₹19,447.57 crore from ₹19,678.76 crore in the corresponding period of the previous fiscal.

In the chemicals business, global caustic soda prices were soft during the quarter. Domestic caustic prices were impacted due to increased domestic capacity, rise in imports and weak demand.

The company said the total capex plan of ₹7,800 crore (at standalone level) is under execution for raising capacities in both the VSF and Chemical businesses, apart from ongoing modernisation capex at various plants. This capital expenditure is expected to be incurred over three years period from FY20-FY22.

“The economic standstill in China and improved sentiment post phase-1 of US-China trade war may lead to some improvement in VSF prices in near term, however the underlying supply-demand imbalance is likely to continue for some time,” the company said.

Published on February 10, 2020
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