Weak demand, high input cost drag Grasim Q1 profits

Our Bureau Mumbai | Updated on March 12, 2018



Grasim Industries, an Aditya Birla Group company, reported a 13 per cent dip in its standalone net profit for the June quarter at Rs 273 crore due to weak demand for viscose staple fibre (VSF).

The sharp rupee depreciation also pushed up input costs, said the company in a press release.

The average realisation from the VSF business was down 16 per cent despite the rupee depreciation, as prices were at their peak in the same quarter of last year.

The increase in caustic soda and coal prices also impacted profitability, it said.

The VSF sales volumes rose 40 per cent to 77,013 tonnes, driven by the uninterrupted operations at the company’s Nagda plant during the quarter. The plant was closed for 27 days in the June quarter last year due to water shortage.


The company’s consolidated net profit was down five per cent at Rs 718 crore (Rs 752 crore), despite better performance by its subsidiary UltraTech Cement.

Profit was impacted by the 20 per cent jump in overall expenses at Rs 5,498 crore.

Sales were up 16 per cent at Rs 6,793 crore (Rs 5,859 crore). Cement business revenue was up 17 per cent at Rs 5,363 crore.

The chemical plant operated at full capacity on the strength of captive consumption of chlorine in value-added products, though the industry capacity utilisation was impacted due to lower chlorine offtake.

Caustic soda sales volumes increased 28 per cent to 69,466 tonnes thanks to the uninterrupted plant operations.

The outcome of cotton crop in the ensuing season will influence the VSF realisations in the short-term.

Despite the projected growth of eight per cent in cement demand, the surplus scenario may continue for three years.

The company’s shares on the BSE were up two per cent at Rs 2,700 on Friday.


Published on July 27, 2012

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