PRESS RELEASE

29 October 2014

Grasim reports financial results for Q2 FY 2014-15

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Investment for growth yielding results - robust volume growth across Businesses

Rs. in crore
Consolidated net revenue 7,945 16%
PBIDT 1,277 12%

Grasim Industries Limited, an Aditya Birla Group company, today announced its results for the second quarter of FY2014-15.

Consolidated financial performance   
PBIDT for the quarter increased by 12 per cent to Rs.1,277 crore (Rs.1,143 crore) as revenue grew by 16 per cent to Rs.7,945 crore (Rs.6,850 crore) driven by robust volume growth in all the Businesses supported by new/acquired capacities.

Interest and depreciation were higher, on account of the commissioning of projects in its Cement and VSF Businesses along with the acquisition of 4.8 Mn TPA cement capacity in Gujarat in quarter 1. Consequently, PBT was up by 5 per cent at Rs.700 crore (Rs.666 crore).

Tax expenses were higher for the current quarter compared to the corresponding quarter in last year during which period there was a write back of tax provision and commissioning of power plant leading to lower tax liability. As a result, net profit was Rs.416 crore (Rs.450 crore).

Viscose Staple Fibre (VSF)
VSF Business achieved record sales volume of 100,927 tonnes, up by 8 per cent, supported by the commissioning of two lines at Vilayat, Gujarat plant. Concerted market development activities have led to market expansion in the domestic segment. Net revenue for the quarter increased by 5 per cent to Rs.1,271 crore. PBIDT at Rs.151 crore was lower by 37 per cent on Y-o-Y basis as realisations were impacted by weak global prices due to overcapacity in China. Higher share of value added products partially offset the impact of decline in prices. Higher volume and full benefit of lower pulp prices have helped in improving profitability sequentially. 
                                                                                                    
VSF Business capex
At the greenfield VSF project at Vilayat, Line 1 and 2 entailing a total capacity 77K TPA have been commissioned in July 2014. The trial run has started for the remaining two lines (43K TPA) to manufacture specialty fibre. Post this expansion, the total VSF capacity will rise to 498K TPA.

Chemical Business
The Chemical Business volume grew by 28 per cent, with the ramping up of the Vilayat plant. Operating margins declined as a result of the increase in power costs. PBIDT at Rs.79 crore rose by 28 per cent on the strength of volume growth.

Cement subsidiary (UltraTech Cement)
Cement sales at 10.92 million tonnes are up by 10 per cent led by higher demand and additional volume from the Gujarat Cement units acquired from Jaypee Cement in Quarter 1. Costs were impacted on account of increase in prices of petcoke and input material coupled with higher freight and royalty on limestone. Net revenue increased to Rs.5,772 crore as compared to Rs.4,871 crore in the corresponding quarter of the previous year led by volume growth. PBIDT was Rs.987 crore against Rs.773 crore in corresponding quarter and PAT increased to Rs.414 crore (Rs.280 crore). 
 
Cement capex
The company’s cement capacity increased to 63.2 Mn TPA with the commissioning of the 1.4 Mn TPA grinding capacity at Malkhed, Karnataka. The other brownfield expansions under implementation are progressing well. Upon completion, this will take the total capacity to 70 Mn TPA. A 25 MW thermal power plant was commissioned at Tadipatri, Andhra Pradesh, taking total captive power capacity to 733 MW.

Outlook
In the VSF sector, margins are likely to remain under pressure in the near term due to the overcapacity in China. Sharply declining cotton and polyester prices is a major challenge and may impact the growth of VSF consumption. The slowdown in new capacity additions in China should lead to an improvement in industry utilisation which augurs well for the company. The focus on cost optimisation will continue relentlessly.

In cement, demand is likely to grow by approximately 8 per cent in the current fiscal and should accelerate going forward. The key drivers will be renewed government focus on housing and infrastructure spending.

With additional capacity coming on stream in both the businesses, the company will further consolidate its leadership position and is well-poised to benefit from the expected upturn in the economy.

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.