Grasim reports excellent performance for Q2 FY 07-08. Grasim, the flagship company of the Aditya Birla Group, has posted good results for the second quarter ended 30 September, 2007. Cement and Viscose Staple Fibre (VSF), its core businesses, have been the growth drivers. The chemical and sponge iron businesses have contributed as well. Ongoing modernisation efforts, upgradation of plants and energy optimisation have been instrumental to the growth process.
The company has reported a growth on all fronts, viz., revenue, gross profit and net profit. Revenue was up by 25 per cent at Rs.3,973 crore (Rs.3,186 crore). Gross profit at Rs.1,213 crore (Rs.839 crore) rose by 44 per cent over the corresponding period. Despite a substantially higher provision for tax expenses, Net profit grew by 50 per cent at Rs.620 crore (Rs.414 crore).
Viscose Staple Fibre (VSF) business -The upsurge in global demand coupled with the higher demand for knitted fabrics and increased realisations saw the VSF business post a good performance. Production was up by 7 per cent at 69,678 tons. Sales volumes improved by 11 per cent at 70,183 tons, a historical high for any quarter. The uptrend in international prices backed by a strong demand, resulted in realisations being higher. Increased use of captive pulp and a stronger rupee contained the impact of the steep increase in global pulp prices. The company plans to augment its capacity by 94,875 tons from its current level of 270,100 tons, through capacity expansions of 63,875 tons at Kharach (Gujarat) and 31,000 tons at Harihar (Karnataka).
Additionally, plans are afoot to set up a greenfield plant of 88,000 tons at Vilayat (Gujarat) at an estimated capital cost of Rs.840 crore. The plant would take 2-3 years to come up. The outlook for the VSF business continues to be good.
Chemical plant - The chemical plant put in a better performance during the quarter. Production of caustic soda, which was impacted during the corresponding quarter on account of the shut down of a captive power plant, was higher at 48,752 tons. Sales volumes too were higher at 49,634 tons. Realisations dipped by 8 per cent consequent to the reduction in prices of caustic soda and allied products.
Outlook - Grasim's strong fundamentals, its unrelenting focus on operational excellence, cost optimisation, effective financial management, continuous restructuring of business processes, together with its leadership position in the cement and VSF sectors, augur well for the company. The prospects for Grasim continue to be bright.
marketing@alchempro.com
