Grasim Industries

Grasim Industries has reported impressive 33% jump in the consolidated Net Profit at Rs 669.07 crore over 17% increase in the total income from operations at Rs 6364.07 crore for the quarter ended December 11. Rebound in the volume growth of the cement business on a lower base has supported profitability of the company while viscose business witnessed lower demand and dip in profits.

Quarterly Performance:

For the quarter ended December 11, the company has reported 17% increase in the consolidated Net sales at Rs 6364.07 crore mainly driven by healthy 23% increase in the revenues from the Cement business at Rs 4864.82 crore constituting 76% of the total revenues. With the lower base effect, the cement industry has witnessed 10% growth in the quarter and thus also witnessed higher capacity utilization at 73% (against 68% in the preceding quarter). Cement Sales volumes have improved 5% to 10.44 million MT in the quarter under review.

Revenues from chemical business grew 42% to Rs 209.09 crore while that of the textile revenues grew 12% to Rs 115.82 crore constituting 3% and 2% of the total revenues respectively. Caustic production at 68,741 tonnes grew by 3% supported by full capacity utilization. Sales volumes were higher by 6%. Caustic prices remained firm in line with international trends. Lead by higher caustic prices, ECU realization jumped up 35% y-o-y to Rs 24385 per MT. Higher volumes and better prices have aided profitability of this business.

On the other hand, viscose division has reported 5% dip in the revenues at Rs 1247.17 crore constituting 19% of the total revenues. This was on the back of 8% dip in the volume sales to 78215 MT in the quarter under review. However, production inched up 1% to 84233 MT in the quarter. Despite fall in the international prices, average realizations inched up 4% to Rs 128499 per Mt on the back of depreciation of rupee.

At segment level, all the segments expect viscose reported healthy increase in the margins. Cement division has reported bumper 410 bps jump in the margins to 16.8% while that of chemicals witnessed 270 bps increase to 18.2% and textiles 170 bps to 5.8%. The pressure on both demand and prices impacted volumes to drop, there by pressurizing the margins in Viscose business to decline 840 bps to 21.7%. The cement business margins would have been better but for increase in the energy cost in the quarter under review. The company has witnessed 16% increase in the variable cost of Cement business. This is attributable to the 30% rise in domestic coal during Q4FY11 and continuous increase in prices of imported coal on the back of rupee depreciation. The power and fuel cost as % of sales net of stock adjustments increased by 160 bps to 21.9% in quarter under review. Resultantly, OPM improved just 30 bps to 22.2% and led Operating profit up 18% to Rs 1412.97 crore.

The Other income has doubled to Rs 140.91 crore and led EBITDA up 23% to Rs 1553.88 crore. Further, interest cost slipped 54% to Rs 49.71 crore and depreciation declined 3% to Rs 288.73 crore and led PBT up 41% to Rs 1215.44 crore. At segment level, the cement business has clocked 63% jump in the profit at Rs 818.22 crore, chemicals profit grew 66% to Rs 38.15 crore and textiles grew 58% to Rs 6.68 crore. On the other hand, viscose business has reported 31% fall in the segment profit at Rs 270.44 crore. Cement business accounted major 63% of the total segment profit followed by the viscose business at 24%.

The company has reported 27% jump in the taxation at Rs 330.21 crore and led PAT up 48% to Rs 885.23 crore. After accounting 46% increase in the share of profits from associates at Rs 18.63 crore and sharp 113% jump in the minority interest at Rs 234.79 crore, Net profit was up 33% to Rs 669.07 crore.

YTD performance:

For the nine months ended December 11, Grasim Industries has reported 20% increase in the consolidated topline at Rs 18071.38 crore and 31% jump in the Net Profit at Rs 1838.68 crore. Cement business which constituted 75% of the total revenues and 68% of the segment profit - is the major driver for the profitability in the period under review. The revenues from the cement business grew 22%to Rs 13691.01 crore while the segment profit improved 44% to Rs 2240.16 crore. On the other hand, viscose business has clocked 10% growth in revenues at Rs 3642.13 crore and 4% dip in the segment profit at Rs 917.95 crore.

• Spike in the input (pulp) cost coupled with rupee depreciation has affected operating margins in the Viscose staple fiber business. Domsjo performance improved on sequential basis despite fall in the pulp realization. Grasim share of PAT at Domsjo was Rs 8.5 crore in the quarter ended December 11 against loss of Rs 9.1 crore in the quarter ended September 11.

• The company plans to set up a green field VSF project of 180K TPA in Turkey in JV with group companies.

• Caustic production improved 3% to 68741 MT while the sale volumes improved 6% to 71232 MT. Caustic capacity expansion at Vilayat (182500 TPA) is progressing as per schedule and is slated to commission by Q4FY13.

• In the cement business, the industry has added 11 Million MT in the current financial year. The production of grey cement has improved 5% to 10.44 million mt and that of cement sales volumes improved 5% to 10.44 million MT. The white cement production improved 5% to 1.54 lakh MT in the quarter under review. The company has availed interest and wage subsidy for plants set up in recent past resulting in further improvement of overall profitability.

• The Chhattisgarh and Karnataka brown field cement expansion projects aggregating 9.2 million TPA, are on track. Both these projects are expected to be operational by Q1FY14.

• A total capex of Rs. 11,000 crore is under implementation in the cement business towards the expansion projects, strengthening of logistic infrastructure, setting up of captive thermal power plants, ready-mix concrete plants and modernization projects.

Grasim Industries: Consolidated Financial Results

Segment Results