Grasim said the governments far sightedness in providing timely stimulus in the aftermath of COVID-19 has provided support to multiple sectors leading to a broad-based economic recovery. The recovery in the demand has been accelerated by greater consumer confidence on the back of the launch of the vaccination program across the world.
The Viscose business (VSF) performance steadily improved since Q1 FY21 on the back of robust demand growth led by consumer spending picking up with the onset of festive & wedding season. The capacity utilisation of the VSF business reached 100% through Q3 FY21 and the capacity utilisation of the VFY business also increased to 76% in Q3 FY21 from a low of 12% in Q1FY21. The VSF prices in China bounced back from their historic lows driven by a strong revival in domestic demand and favourable inter fibre dynamics with widening gap between cotton and VSF prices. This led to a dramatic reduction in VSF inventories in China even as the operating rates went up. The net revenue for the Viscose segment (including VFY) stood at Rs 2,145 crore, EBITDA at Rs 482 crore improved substantially on the back of higher sales volumes, better product mix and lower cost even though the YoY realisations were lower.
In chemicals business, the domestic caustic soda business witnessed an upsurge in demand during the quarter, driven by higher usage from textile, alumina and paper industry, recording capacity utilisation levels of 89% in Q3 FY21, an improvement of 9% on a sequential basis. While caustic soda prices (CFR) in Asia recovered from the lows of $239/MT to hit the $270/MT level towards the end of the quarter on the back of lower operating rates caused by unplanned outages, the ECU realization continues to be muted, though volume has picked up. The Net Revenue for Q3FY21 stood at Rs 1,281 crore and EBITDA stood at Rs 177 crore close to pre-COVID levels.
Grasim said capex spend on VSF & chemicals capacity expansion was revived post lockdown and is progressing as per the revised plan, besides the ongoing modernisation capex at various plants. The total capex spends for 9M FY21 stood at Rs 799 crore.
Meanwhile, the board approved a foray into the paints business. The board has also approved initial capital expenditure of Rs 5,000 crore over the next 3 years.
The company said it reduced its consolidated net debt to Rs 12,767 crore as of 31 December 2020 from Rs 20,761 crore as of 31 March 2020.
Shares of Grasim were up 0.38% at Rs 1239.75. Grasim Industries is a leading diversified player with leadership presence across many sectors. It is a leading global producer of Viscose Staple Fibre, the largest Chlor-Alkali, Linen and Insulators player in India.
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