Lower realisation pulls down Grasim net 15%

Our Bureau Mumbai | Updated on March 13, 2018 Published on August 03, 2013


BL04_Grasim Ind.eps

Grasim Industries, an Aditya Birla group company, reported a 15 per cent drop in consolidated net profit at Rs 610 crore (Rs 718 crore) in the June quarter due to lower VSF realisation and drop in profit contribution from cement business, over the same period last year.

Total income increased two per cent to Rs 7174 crore (Rs 6,972 crore).

Revenue from viscose staple fibre and wood pulp segment was up 14 per cent at Rs 1,368 crore (Rs 1,203 crore). Cement business revenue was down Rs 5,294 crore (Rs 5,362 crore) while that of the chemicals division’s was down marginally at Rs 224 crore (Rs 239 crore).

Operating profit of VSF business was down 55 per cent at Rs 105 crore (Rs 235 crore) and that of the cement business dipped 21 per cent to Rs 860 crore (Rs 1,083 crore). The chemical division’s contribution fell 32 per cent to Rs 39 crore (Rs 57 crore).

The expansion of VSF capacity by 36,500 tpa was completed in the June quarter with commissioning of 20 MW captive power plant at Harihar in Karnataka.

The Kharach unit in Gujarat operated at lower capacity for 45 days as Government canal supplying water was under repair. However, the new reservoir at Nagda (Madhya Pradesh) and better planning at Harihar (Karnataka), ensured that there is no production loss.

VSF sales volume was 77,518 tonnes (77,013 tonnes), while production was up five per cent at 87,692 tonnes. The impact of the decline in prices was partly neutralised by rupee depreciation. On the cost front, the price of caustic soda and sulphur has eased. Pulp prices have improved sequentially.

Despite tough global economic condition, the VSF business has delivered better revenues, but realisation was down due to surplus capacity in China, said Adesh Gupta, Director, Grasim Industries.

“The VSF industry continues to face a challenging environment in the immediate term. The large expansion plans in the VSF business will ensure our leadership position and add to profits once the demand picks up," he added.

During the quarter, the company expanded its caustic soda plant at Vilayat in Gujarat by 1,82,500 tonnes per annum.

The company expects its focus on improving asset productivity and cost reduction to maintain its position as the lowest cost producer.


Published on August 03, 2013
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