In the companys Viscose business, the VSF sale volume registered sequential degrowth in Q1FY22. To cushion the impact of the slowdown in the domestic textile sector, Grasim proactively increased the share of exports to 31% in Q1FY22 from 11% in Q4FY21. The share of value-added products in the overall sales mix also improved to 26% in Q1FY22 from an average of 22% in FY21. Due to the lockdown-led drop in domestic volume, the company advanced the Harihar plant maintenance shutdown to May 2021. VFY volumes were also impacted due to lower demand. The domestic fibre demand has recovered swiftly post easing of the lockdown and is now nearing the Pre COVID level. The VSF prices in China corrected from their multiyear high in Q1FY21 and have stabilised at the current level of 13,000 RMB. Chinas VSF inventory at plants increased to 24 days in Jun21 from 13 days (Mar-21), leading to readjustment of production levels by Chinese VSF players to take care of inventory built up and to lend stability to the prices. As a result, the OR in China fell to 69% by June end.
The second COVID wave had a marginal impact on the operational performance of the chemical business. International caustic soda prices maintained the upsurge in Q1FY22 driven by supply outages due to maintenance shutdown and demand improvement. The rise in domestic caustic soda prices was subdued owing to weak demand from textile, organic chemicals and excess supply situation. The caustic soda capacity utilisation stood at 85% in Q1FY22, higher than the industry average. The Advanced Materials business reported its best-ever performance in Q1FY22, driven by strong demand scenario and better pricing environment globally and in India. The company said demand continues to be driven by the wind and auto segments.
The company said its paint business is making progress in line with the plans. Land acquisition for setting up plants at different states is in process, and simultaneously project engineering plans are also progressing.
On the capex front, Grasim said commissioning of VSF expansion (2 lines of 300 TPD each) at Vilayat (Gujarat) is as per schedule. Line 1 is expected to be commissioned in Q2 and Line 2 in Q3 of the current financial year. In the Chlor-alkali business, the commissioning of Rehla plant-91KTPA and CMS plant 54.8KTPA is expected in Q2FY22. The commissioning of BB Puram plant (Phase-1)- 73KTPA and Vilayat plant (Phase-1)- 73KTPA is expected in H2FY22. The total capex (to be spent) for FY22 stands at Rs 2,604 crore (excluding the paints and fertiliser).
Shares of Grasim Industries were up 0.35% at Rs 1,497.60 on BSE.
Grasim Industries is a leading global producer of Viscose Staple Fibre, the largest Chlor-Alkali, Linen and Insulators player in India. Through its subsidiaries, UltraTech Cement and Aditya Birla Capital, it is also Indias largest cement producer and a leading diversified financial services player.
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