Grasim Industries Ltd Management Discussions.


The onset of the COVID-19 pandemic brought economic activities to a near standstill at the beginning of FY 2020-21 as a nationwide lockdown was imposed to contain the virus spread. As a result, Indias GDP contracted by 23.4% in Q1 FY 2020-21. However, with the gradual unlocking in June 2020, the economy recorded a sharp rebound, fuelled by the synchronised relief and revival measures undertaken by the Central Government and the RBI. The counter measures resulted in a cumulative stimulus of ~C20 lakh Crore (~10% of the GDP) with a clarion call to make India self-reliant under the Aatmanirbhar Bharat Abhiyan.

With the release of significant pent-up demand alongside festive demand gaining traction, the second half witnessed a return to growth, with GDP contraction for the full year coming in at 7.3%, much better than the double-digit de-growth estimated earlier. The mega infrastructure push through the C110 trillion National Infrastructure Pipeline (NIP) and the C5 trillion infra outlay in the Union Budget 2021-22 lifted market sentiments and enabled fixed capital formation.

The Production-Linked Incentive (PLI) scheme aimed to uplift MSMEs and enhance manufacturing GVA from the current 16.5% is likely to unlock ~$520 billion in the countrys output in the medium term. Further, India is being increasingly seen as a viable alternative sourcing destination by MNCs adopting a China + 1 to de-risk their supply chain.

However, the more intense second wave of COVID-19 hit India hard at the end of FY 2020-21, necessitating the imposition of new localised lockdowns. That said, with mass vaccination underway in full steam and the element of surprise being minimal, we believe the economy is now much better placed to absorb external shocks than it was a year earlier.



Unit FY 2020-21 FY 2019-20
Consolidated Performance
Installed Capacity - VS KT 591 566
FInstalled Capacity - VFY KT 48 46
Production - VSF KT 452 567
Production - VFY KT 26 42
Sales Volume - VSF KT 463 554
Sales Volume - VFY KT 27 41
Revenue C in Crore 6,965 9,235
EBITDA C in Crore 1,187 1,339
EBITDA Margin % 17 14

The COVID 19-induced lockdown adversely affected the demand for textile products across markets. India was no different. As the lockdown was gradually relaxed, labour availability increased in the key textile hubs of the country, with demand being boosted by a steady increase in consumer spending especially online sales as well as impending festive demand. The value of exports of Indian textile products also recovered to near pre-COVID levels in Q3 FY 2020-21.

The VSF business has been at the forefront of innovation. Under the Liva brand, we launched an antimicrobial fibre within few weeks of the pandemic outbreak. The fabric produced using this special fibre inherently possesses antimicrobial properties that inhibit the growth of bacteria and viruses on apparels and home textiles and kills them to the extent of 99%+. This makes the apparels and home textiles safe, without compromising on performance and fashion quotient. We also commenced non- woven production on existing lines to meet the growing demand for the product due to pandemic.

Global VSF demand stood at 5.9 MTPA in CY2019, recording a CAGR of C4.4% from CY2014; demand growth is expected to pick up from CY21 onwards.

The Chinese VSF industry has witnessed a steady rise in the operating rates on back of strong local demand and lower inventory levels across the value chain.


VSF, cotton and polyester prices witnessed a double-digit increase in FY 2020-21, with the recovery in demand for textile products. The widening gap between cotton and viscose prices has also led to a shift in favour of viscose, thereby boosting viscose demand further. The improvement in operating rates, lower VSF inventory levels and inter-fibre dynamics led to a continuous month-on-month rise in VSF realisations in China from September 2020 and to reach a multi-year high in March 2021.

The pickup in domestic textile demand positively impacted VSF demand, with industry capacity utilisation levels rising from Q2 FY 2020-21 onwards. The capacity utilization of the VSF business touched ~100% in Q4 FY 2020-21 from ~26% in Q1 FY 2020-21, with a month-on-month improvement in the operating rate.

Consequently, the share of domestic sales in the total sales mix grew from 82% in Q2 FY 2020-21 to 89% in Q4 FY 2020-21 while the share of value-added products in the overall sales mix increased to 26% from 15%.


The dissolving grade pulp is the single largest raw material used for the production of VSF. Pulp prices maintained a soft trend for a significant part of FY 2020-21 due to the weak demand scenario, but prices started firming from Q4 FY 2020-21 with the rise in VSF prices. DWP Hardwood prices inched up from $624/tonne in Q1 FY 2020-21 to $935/tonne in Q4 FY 2020-21.

Caustic soda prices in India remained subdued throughout the year, taking a cue from the global trend. Our Viscose business embarked on a fixed cost rationalisation plan in FY 2020-21 and achieved an 18% y-o-y reduction.


VSF demand in India and overseas has witnessed a solid rebound, suggesting a strong demand for cellulosic fibres. VSF continues to be the fastest growing textile fibre globally, projected to record ~7% CAGR over 2020-22. The VSF demand growth will be mainly driven by rising textile consumption due to population growth, rising urbanisation, and improved standards of living. The India VSF demand is expected to grow at a higher rate than that of the world.


Demand for VFY also remained subdued during Q1 FY 2020-21. With the reopening of the textile centres and consumption hubs, Q2 FY 2020-21 witnessed a recovery in demand. Capacity utilisation of the VFY business increased to 93% in Q4 FY 2020-21 from a low of 11% in Q1 FY 2020-21. The VFY business reported revenue of C1,195 Crore and an EBITDA of C109 Crore in FY 2020-21.

Chemicals Business

Unit FY 2020-21 FY 2019-20
Caustic Soda
Installed Capacity KT 1,147 1,147
Production KT 894 998
Sales Volume KT 900 991
Specialty Chemicals (Chlorine Value Added Products)
Production KT 567 611
Sales Volume KT 568 607
Chemicals Business
Revenue C in Crore 4,581 5,502
EBITDA C in Crore 590 1,008
EBITDA Margin % 13 18

COVID crises created demand for chlorine value added product which are used in the hygiene products and disinfectants, bu on the other hand the demand for caustic soda weakened du to slowdown in the industrial activity during the Q1FY 2020-2 on back of lockdown. Demand for caustic soda started to recove from Q2 FY 2020-21, driven by higher usage in textile, pape and alumina. Capacity utilisation also improved from sub-50% ir Q1 FY 2020-21 to 94% in Q4 FY 2020-21.

The cost of power and salt - the key raw material for caustic soda production - was lower on a y-o-y basis. The Chemical: business maintained a strict cost discipline and was able t reduce the fixed cost by 15% y-o-y.

Global caustic soda prices weakened to below $250/tonnc during the year, before retracing back to the $300/tonne level ir Q4 FY 2020-21. In India, caustic soda prices remained subdue due to overcapacity in the sector and came under furthe pressure following the COVID 19 outbreak.

Lower realisations impacted EBITDA, despite the cost contro measures implemented during the year.

Increasing the percentage of chlorine integration is a long-term strategic priority for the business. In FY 2020-21, chlorine integration stood at 28%, which will likely improve to 40% by FY 2024-25 with the launch of value-added products.


FY 2019-20 - 28%, FY 2020-21 - 29%


Demand for Advanced Materials (Epoxy) improved led by the auto and consumer durables industries. Capacity utilisation also witnessed a significant sequential improvement. Further, supply constraints in the industry provided tailwinds, leading to significant improvement in realisations.


The domestic caustic soda market is expected to be oversupplied in the near term. Nonetheless, demand is expected to recover post 2021, at a CAGR of mid-single digit till FY 2024-25. In line with growing demand in Epoxy, we are doubling our capacity in the Advanced Materials segment within the Chemicals business.

Fertiliser Business (Indo Gulf)

The Fertiliser business achieved revenue of C2,253 Crore and EBITDA of C222 Crore in FY 2020-21 compared to C2,676 Crore and C199 Crore, respectively, in FY 2019-20. The increase in EBITDA was driven by higher PURAK and Oorja sales and lower fixed cost, partially offset by higher energy cost.

The Board decided to divest our Fertiliser business by way of a slump sale under a scheme of arrangement under section 232-233 of the Companies Act, 2013 and requisite regulatory approvals are in process. Details of the divestment plan have been shared in the Boards Report. The divestment will be effective upon completion of the approval process and requisite filing with the regulatory authorities.

Textiles Business

Our Textiles business witnessed a sharp downtrend in the overall business performance as the COVID lockdown impacted demand. For FY 2020-21, the Textiles business reported revenue of C920 Crore and EBITDA of C(53) Crore.

Flax prices, which were trending lower from April 2020 to August 2020, recovered in H2 FY 2020-21 driven by weakness in crop.

Demand for Linen Yarn and fabric picked up in H2 FY 2020-21 driven by retail offtake, as well as seasonal festive and wedding demand.

Demand for wool remained muted given the lack of demand for formal wear and a slow pick-up in the home textiles market. Wool prices remained subdued until September 2020 and started to recover thereafter, driven by demand from China.

Our retail arm, Linen Club is one of the largest single brand franchise network in India with 186 EBOs as on 31st March 2021. Besides fabrics, Linen Club stores also offer a wide range of Linen Apparel.

Our cotton textiles business is focused on the premium cotton segment with brands such as Soktas, Giza House and Excellence, and is complementing the existing linen business. In FY 2020-21, Grasim Premium Fabric merged with Grasim effective from 1st April 2019.

*Grasim Premium Fabrics Private Ltd is using these brand under a license from Soktas Tekstil Sanayi Ve Ticaret Anonim Sirketi

Insulator Business

Demand growth in the insulator industry is being driven by power generation, transmission and distribution. The business generated revenue of C352 Crore and EBITDA of C21 Crore in FY 2020-21.

Cement Business (UltraTech Cement Limited)

UltraTechs financial performance for FY 2020-21, the consolidated revenue stood at C44,726 Crore, the consolidated EBITDA witnessed an increase of 24% YoY to C12,302 Crore. The consolidated sales volume stood at ~86.4 MTPA.

Further, consolidated net debt fell from C10,264 Crore in FY 2019-20 to C6,717 Crore in FY 2020-21. Net Debt/EBITDA stood at 0.55x, as on 31st March 2021.

UltraTech also approved a capacity expansion plan of 19.5 MTPA through a mix of greenfield and brownfield expansions. Upon completion, its total installed capacity will expand to 136.25 MTPA.

Financial Services Business (Aditya Birla Capital Limited)

Aditya Birla Capital reported a solid financial performance, despite a challenging economic environment. Revenue and net profit after minority interest for FY 2020-21 grew 15% and 22% y-o-y to C19,248 Crore and C1,127 Crore, respectively.

The combined lending book of the NBFC (Aditya Birla Finance Limited) and the HFC (Aditya Birla Housing Finance Limited) stood at C60,557 Crore for FY 2020-21. Net interest margin (including fee income) expanded by 98 bps to 5.98%.

Aditya Birla Sun Life AMC, Indias fourth largest mutual fund (excluding ETF), reported domestic Average Assets Under Management (aaum) of C2,59,422 Crore, as on 31st March 2021.

In the Life Insurance business, First Year Premium (FYP) for FY 2020-21 grew 14% y-o-y to C1,938 Crore.

Solar Power Business (through

Renewables Limited and Aditya Birla Solar Limited)

Our Solar Power business has a cumulative installed capacity of 502 MW, with 182 MW being commissioned during FY 2020-21. In the next two years, the cumulative capacity is projected to reach 845 MW with a mix of group captive and Discoms.

Total revenue from the Solar Power business was C177 Crore and EBITDA was C136 Crore, up 51% and 113% y-o-y, respectively.




Consolidated revenue from operations marginally increased to C76,398 Crore in FY 2020-21 from C75,141 Crore in FY 2019-20, despite COVID-related disruptions. The dip in VSF and Chemicals revenue was more than offset by the increase in Cement and Financial Services revenue.

Operating Profit (EBITDA)

Consolidated EBITDA rose from C13,615 Crore to C15,766 Crore, primarily driven by the Cement and Financial Services businesses.

Finance Cost

At the consolidated level, finance cost fell from C2,276 Crore in FY 2019-20 to C1,809 Crore in FY 2020-21. It was unchanged y-o-y at the Consolidated level.

At the Consolidated level, net debt reduced to C914 Crore, as on 31st March 2021, from C2,999 Crore, as on 31st March 2020, driven by cash conservation measures, postponement of capital expenditure and treasury performance.

At the consolidated level too, our net debt fell from C20,882 Crore to C8,630 Crore during the same period.


Depreciation remained largely unchanged y-o-y at C4,033 Crore

Tax Expenses

Total tax expenses increased significantly from C(84) Crore in FY 2019-20 to C3,022 Crore in FY 2020-21 on account of a one-time reversal of opening net deferred tax liability of C2,334 Crore in FY 2019-20.

Profit after Tax (PAT)

Profit after tax for FY 2020-21 stood at C4,305 Crore compared to C4,412 Crore in FY 2019-20.

During FY 2019-20, the exceptional item of C1,270 Crore represents the impairment charge of Aditya Birla Finance Limited and Aditya Birla Housing Finance Limited which has been charged to the Profit and Loss Statement.


For FY 2020-21, revenue from operations fell to C12,386 Crore from C16,082 Crore in FY 2019-20. Net revenue of the Viscose business was down 25% y-o-y to C6,965 Crore due to lower sales volumes and realisations primarily owing to COVID-19.

The Chemicals business reported revenue of C4,581 Crore, down from C5,502 Crore in the year earlier period, due to a dip in caustic soda and chlorine realisations and sales volumes.

Standalone EBITDA fell to C2,078 Crore from C2,661 Crore. PAT (after exceptional items) fell to C905 Crore from C1,288 Crore.

Key Standalone Ratios

S No. Particulars FY 2020-21 FY 2019-20 Change
1. Debtors T/o Ratio (Net Sales/Average Debtors) 5.44 5.01 8%
2. Inventory T/o Ratio (Operating Cost i.e. Total Income - EBITDA/Average Inventory) 4.42 4.99 -13%
3. Interest Coverage Ratio ((EBITDA - Current Tax)/Interest) 8.45 10.19 -21%
4. Current Ratio (Current Assets/Current Liabilities) 1.16 1.10 6%
5. Debt Equity Ratio (Borrowings/Net Worth) 0.10 0.14 -41%
6. Operating Profit Margin (%) (EBIT/Net Revenue from Operations) 10.09 11.49 -14%
7. Net Profit Margin (%) (PAT/Total Income) 7.02 7.76 -11%