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Grasim Industries, an Aditya Birla Group company, has reported a three per cent dip in its standalone net profit due to lower demand for Viscose Staple Fibre (VSF) and high input cost.
After witnessing an upturn in September, sentiments in VSF business were affected during the quarter on cautious approach adopted by the textile value chain given the Euro zone uncertainties, said Grasim in a press release. Consequently, VSF demand and prices remained under pressure, besides the operating margins were impacted by increase in input costs due to rupee depreciation.
VSF sales were down eight per cent at 78,215 tonnes (84,621 tonnes), while production was up one per cent to 84,233 tonnes (83,026 tonnes). The company expects VSF demand to remain volatile in the present macroeconomic conditions.
Caustic soda production grew three per cent at 68,741 tonnes supported by full capacity utilisation. Sales volumes were higher by six per cent as prices remained firm in line with international trends.
On consolidated basis, the company's net profit rose 33 per cent to Rs 669 crore (Rs 502 crore) and net sales were up 16 per cent to Rs 6,260 crore (Rs 5,390 crore) largely aided by better contribution from the cement business.
UltraTech Cement, a subsidiary of Grasim, reported revenue of Rs 4,865 crore and net profit of Rs 598 crore in the quarter under review. The sector demand growth improved to about 10 per cent during the quarter on account of a lower base effect in the corresponding quarter.
The sector capacity utilisation during the quarter improved to 73 per cent as compared with 68 per cent in the preceding quarter, it said.
The company expects the surplus scenario in the cement business to subside gradually over a period of 2-3 years with an expected growth in demand. The changed pricing mechanism by Coal India will lead to increase in energy costs and pose a challenge in both the businesses, Grasim said.
Grasim Industries shares were down one per cent at Rs 2,491 on Tuesday.
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