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PRESS
RELEASE
28
July 2009
Grasim
reports excellent performance for Q1 FY 2010
Click
here to view the results
|
| Consolidated
net revenue exceeds Rs. 50 billion |
| Consolidated
net profit exceeds Rs. 10 billion |
Financial performance
|
Rs.
crore
|
|
Consolidated
|
Standalone
|
|
Q1
FY10
|
Q1
FY09
|
Per cent
change
|
Q1
FY10
|
Q1
FY09
|
Per
cent
change
|
| Net
revenue |
5,123
|
4,448
|
15
|
3,079
|
2,618
|
18
|
| PBIDT |
1,681
|
1,356
|
24
|
947
|
834
|
14
|
| Profit
before taxes |
1,358
|
1,090
|
25
|
763
|
699
|
9
|
| Profit
after taxes (before extraordinary gain) |
934
|
792
|
18
|
531
|
514
|
3
|
| Minority
share |
(190)
|
(120)
|
-
|
|
|
|
| Net
profit (before extraordinary gain) |
744
|
672
|
11
|
531
|
514
|
3
|
| Net
profit (after extraordinary gain) |
1,080
|
672
|
61
|
867
|
514
|
69
|
| EPS
(Rs.) |
|
|
|
|
|
|
| Before
extraordinary gain |
81
|
73
|
11
|
58
|
56
|
3
|
| After
extraordinary gain |
118
|
73
|
61
|
95
|
56
|
69
|
Grasim, an Aditya Birla Group company, today announced its results
for the quarter ended 30 June 2009.
Consolidated revenue for the quarter rose by 15 per cent at
Rs. 5,123 crore (Rs. 4,448 crore). Net profit was higher by
61 per cent at Rs.1,080 crore (Rs. 672 crore) which included
an extraordinary gain of Rs.336 crore (net of tax) arising from
the sale of sponge iron business.
Grasim's
stand-alone revenue for the quarter stood at Rs. 3,079 crore
(Rs. 2,618 crore). Despite higher interest cost and depreciation
on new capacity created, net profit (after extraordinary gain)
was higher by 69 per cent at Rs. 867 crore (Rs. 514 crore).
The benefit of these new capacities will accrue fully in the
subsequent quarters, as normally new plants take about a year
to fully stabilise.
The cement
business has been the key contributor. The company has posted
a higher profit, despite the adverse performance of the sponge
iron business which was disposed of during the year. The sponge
iron business sold has shown a loss of Rs. 44 crore, as against
a profit of Rs. 65 crore at PBIT level in the corresponding
quarter.
The consolidated
as well as the standalone results for the quarter are not strictly
comparable with the corresponding quarter's results, owing to
the sale of sponge iron business on 22 May 2009 and consolidation
of Idea Cellular Limited as an associate from 1 January 2009,
as against a JV earlier.
On comparable
basis, excluding sponge iron business from both Q1 FY10 and
Q1 FY09 and consolidation of Idea as an associate in Q1 FY09:
- Revenue
increased by 25 per cent on stand-alone basis and by 24
per cent on consolidated basis
- PBIDT
increased by 30 per cent on stand-alone basis and by 39
per cent on consolidated basis and
- Net
profit (before extraordinary gain) increased by 20 per cent
on stand-alone basis and by 24 per cent on consolidated
basis
Highlights
of Grasim’s operations
|
|
Production
|
Sales
|
|
|
Q1
FY10
|
Q1
FY09
|
Per
cent
change
|
Q1
FY10
|
Q1
FY09
|
Per
cent
change
|
| Products |
| Cement |
Mn.
M.T. |
4.91
|
3.99
|
23
|
4.88
|
3.97
|
23
|
| White
cement |
M.T. |
105,299
|
94,323
|
12
|
106,898
|
92,067
|
16
|
| Wall
Care Putty |
M.T. |
42,372
|
31,550
|
34
|
43,639
|
31,543
|
38
|
| Viscose
staple fibre |
M.T. |
62,352
|
58,083
|
7
|
67,418
|
56,760
|
19
|
| Caustic
soda |
M.T. |
52,231
|
47,084
|
11
|
49,845
|
47,800
|
4
|
Cement
business
The cement business has posted a robust performance. Production
grew by 23 per cent at 4.91 million tons. The ramping up of
new capacities and higher growth in the northern region resulted
in 23 per cent rise in sales volumes, vis-à-vis the sector
growth of 13 per cent. Operating profit rose significantly,
on the back of higher volumes, increased share of captive power
and softening of imported coal and petcoke prices. The share
of thermal power increased from 41 per cent to 78 per cent during
the quarter.
The white
cement business too put in a good performance, ably supported
by Wall Care Putty which saw a 38 per cent growth in volumes.
Cement
subsidiary
The performance of UltraTech Cement Limited (UltraTech), a major
subsidiary of Grasim, was equally impressive. Domestic volumes
registered a growth of 18 per cent at 4.65 million tons. Exports
were higher by 66 per cent at 0.68 million tons. Net profit
was higher by 60 per cent at Rs. 419 crore.
Cement capex
New capacities aggregating 2.9 million tons comprising of 1.6
million tons at Aditya Cement at Shambhupura (Rajasthan) and
1.3 million tons split grinding unit at Aligarh (Uttar Pradesh)
were commissioned during the quarter. UltraTech too expanded
its capacity by 1.2 million tons at Tadpatri (Andhra Pradesh).
The overall cement capacity of Grasim and UltraTech, thus stood
augmented at 45.65 million tons at the end of the quarter. Upon
the commissioning of the grinding unit at Kotputli in Rajasthan
by the end of Q3 FY10, the overall capacity will stand further
expanded at 48.8 million tons.
A total
capital outlay of Rs. 4,160 crore has been earmarked for the
cement business (including the outlay of Rs. 2,055 crore at
UltraTech), which would be spent over the next two years.
The major capex comprises of logistics infrastructure, waste
heat recovery system, captive thermal power plant, evacuation
facility, modernisation and completion of existing projects.
Cement
outlook
Cement industry may grow at 9 per cent during the year due to
government initiatives to boost rural development, infrastructure
and housing.
The new
capacities in the sector, which are at various stages of commissioning,
will inevitably result in a surplus scenario from H2 FY10,
resulting in pressure on margins. However, the company's initiatives
in the form of capacity addition, new thermal power plants
and increased capital productivity should help in partially
offsetting the impact on margins.
Viscose
staple fibre (VSF) business
In VSF business, production grew by 7 per cent at 62,352 tons.
The business witnessed a resurgence of demand and prices, emanating
from refilling of dried up inventory in the value chain and
marginal improvement in macro economic conditions due to the
stimulus packages announced by various countries. This resulted
in a 19 per cent growth in volumes. Realisation was, however,
lower by 4 per cent over the corresponding quarter but better
than the last quarter. With the onset of the monsoon, the production
at Nagda, which was suspended from 22 May 2009, was resumed
on 9 July 2009.
The mixed
signals in the end-consumer off-take at the retail level globally
and the increase in the rate of excise duty from 4 per cent
to 8 per cent in India, may lead to some contraction in current
levels of volumes and lower realisation from H2 FY10. Though
margins may continue to improve in the short term due to increased
realisation and lower input cost, the trend may reverse in
the second half unless there is a clear improvement in the
global scenario. The company would continue its focus on cost
reduction measures and enlargement of product mix to improve
its profitability from this business.
Chemical
plant
The chemical business' performance was subdued. The steep fall
in prices of chlorine and hydrochloric acid led to a 7 per cent
fall in ECU realisation. This, together with higher salt cost,
led to a decline in operating margins.
The demand
for caustic is likely to be depressed due to the slowdown
in growth from alumina segment in international markets. ECU
realisation too is expected to remain under pressure, given
the global market conditions.
Sale of
sponge iron business
In line with its strategy of focusing on its core businesses,
viz., cement and VSF, the company divested its sponge iron business
by way of a slump sale under a Scheme of Arrangement under Sections
391-394 of the Companies Act, 1956, at a sale consideration
of Rs. 1,030 crore, resulting in a net gain of Rs. 336 crore.
The transaction was completed on 22 May 2009.
Outlook
The company will continue to have leadership position in cement
and VSF business. With substantial increase in capacities, improved
cost optimisation, higher productivity and strong fundamentals,
the prospects for the company in the long term remain positive,
though there may be bumpy road in the immediate future.
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