PRESS RELEASE

11 May 2011

Grasim reports excellent results for Q4FY11
Click here to view the results

Rs. crore
Consolidated net revenue
6,502 19%
Consolidated net profit
865 32%
Capex under Implementation
  VSF & Allied Chemicals
3,400
  Cement
11,000

Consolidated Financial Performance:  
Grasim Industries Limited, an Aditya Birla Group Company, today announced excellent results for the 4th quarter ended 31st March 2011 with the highest-ever quarterly profit. The improved performance from VSF business whose quarterly sales were the highest during the year was a major driver. Cement business has also reported improved performance.
Rs. crore
 
Quarter ended
Twelve months ended
31.03.11
31.03.10
% Change
31.03.11
31.03.10
% Change
Net revenue
6,502
5,474
19
21,585
20,195
7
PBIDT
1,782
1,500
19
5,397
6,322
(15)
Net profit
(before extraordinary item)
865
654
32
2,265
2,759
(18)
Adjustment:
Idea Cellular $ (14) - - (14)
Minority Interest related to UltraTech $$ - - - 132
Comparable Net Profit 865 640 35 2,397 2,745 (13)
$ The results of Idea Cellular Ltd. for Q4FY11 are yet to be adopted by Idea, hence they are not consolidated and are accordingly adjusted in Q4FY10 for the purpose of comparison.
$$ Increase in minority interest due to direct participation of Grasim shareholder in Samruddhi/ UltraTech on cement business restructuring, added back in FY11 for comparison.

Dividend
The Board of Directors of Grasim has recommended a dividend of Rs. 20 per share. The total outflow on account of the dividend would be Rs. 197 crores (Including the corporate tax on dividend).

Production and Sales Volumes:
 
Q4FY11
Q4FY10
Per cent change
FY 2011
FY 2010
Per cent change
Production
Viscose Staple Fibre M.T.
82,932
81,081
2
305,087
302,092
1
Cement (Consolidated)* Mn M.T.
11.07
10.24
8
39.67
37.02
7
White Cement M.T.
151,478
138,893
9
540,844
514,291
5
Sales Volumes
Viscose Staple Fibre M.T. 85,650 85,714 - 305,072 308,431 (1)
Cement (Consolidated)* Mn M.T. 11.09 10.37 7 39.96 37.29 7
White Cement M.T. 146,510 142,984 2 546,661 509,054 7
*Including Star Cement volumes

Viscose Staple Fibre (VSF)
The shortage of cotton continued to drive prices of all textile fibres, including VSF. High spot pulp prices also contributed to the rise.

Production during the quarter stood at 82,932 tons with full capacity utilisation. Sales volume equalled the peak attained in the corresponding quarter. Revenue grew by 27% aided by better realisations. Input cost rose sharply with higher prices of pulp, caustic, sulphur and coal.

Capex
The expansion projects at Vilayat, Gujarat (120,000 TPA) and Harihar, Karnataka (36,500 TPA) are on track. Both these projects are slated for commissioning in FY13. A total capex of Rs.2,450 crores has been slated for the VSF business comprising Rs.2,100 crores on expansion projects and Rs. 350 crores towards modernisation.

The Company has, subject to regulatory approval(s), decided to acquire 1/3rd stake in Aditya Holding AB, Sweden, who acquired Domsjo Fabriker AB, Sweden, a leading manufacturer of specialty pulp at an enterprise value of Swedish Kroner (SEK) 2.12 Billion (approx.Rs.1,570 crores). This will entail an investment of SEK 380 Million (approx. Rs. 280 crores) and will be funded out of internal accruals. This will enable the Company to have an assured supply of pulp including for its aforesaid expansion projects.

VSF Outlook
Global VSF demand is expected to grow at 5-6% in both the textiles and non-woven segments in the long term.

However, profitability in the short term will be governed by the prices of competitive fibres, inputs and energy costs. Cotton production in the forthcoming season will be the key influencing factor.

Chemical Business
The Chemical business achieved record sales volumes backed by capacity utilisation of 103% and good demand from the end user industries such as aluminium and paper. ECU realisations grew by 13% on a YoY basis.

A 182,500 TPA Caustic plant and a 60 MW power plant at Vilayat, mainly for captive use, is on the anvil. This will entail an investment of Rs. 772 crores.

Cement Subsidiary (UltraTech Cement)
Demand growth remained subdued during the quarter on account of lower infrastructure spending, slowdown in realty sector and non-availability of railway wagons. Cement volumes grew by 7% supported by the acquisition of Star Cement.

Operating costs spiralled due to the substantial increase in input and energy costs, which were partially passed on. While imported coal prices rose by 27% YoY, domestic coal prices shot up by 30% in March, 2011. The Net profit of UltraTech Cement stood at Rs. 716 crores, which included the reversal of income tax provision of the earlier years.

Cement Capex
Brownfield expansions aggregating to 9.2 million TPA at Chhattisgarh and Karnataka units are expected to be operational from early FY14. Orders have been placed for major equipment.

A total capex of Rs. 11,000 crores has been slated for the cement business comprising Rs. 5,150 crores on expansion projects and Rs. 5,850 crores towards augmentation of the grinding and evacuation facility, logistics infrastructure, captive thermal power plant, modernisation etc.

Cement Outlook
The cement industry is likely to grow at over 8.5% per annum to sustain the growth in infrastructure, housing developments and government initiatives in rural development. Around 88 million tons of capacity has been added over the last two years resulting in a surplus scenario, which may last for the next 8 to 10 quarters. The pricing environment remains challenging due to surplus capacity. Margins may continue to remain under pressure.

Stand-alone Financial Performance
The standalone performance for the quarter has been impressive. Revenues were higher by 28%. Net profit increased by 37%
.

Rs. crore
 
Quarter ended
Twelve months ended
(Continued Businesses – Like to Like)
31.03.11
31.03.10
% Change
31.03.11
31.03.10*
% Change
Net revenue
1,462
1,141
28
4,646
3,981
17
PBIDT
583
396
47
1,817
1,588
14
Net profit
(before extraordinary item)
396
289
37
1,182
986
20
* The reported results for the year ended 31st March, 2010 are not comparable as the same include results of the Sponge Iron and Cement Businesses of the Company, sold / demerged during the Financial year 2009-10, effective from 22nd May, 2009 and 1st October, 2009 respectively. Hence, the restated results, excluding the results of the Sponge Iron and Cement Businesses, have been given for last year for better comparison.

Outlook
Strong consumption as well as investment has supported India’s growth story over the last decade and will continue to do so in future. Grasim with its presence in VSF and cement will immensely benefit from both rising consumption as well as investment. Large capacity expansions under implementation in both VSF and Cement businesses will enable the Company to grow at a rapid pace and further consolidate its leadership.

Cautionary Statement
Statements in this “Press Release” describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities law and regulations. Actual results could differ materially from those express or implied. Important factors that could make a difference to the Company’s operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.