Grasim Q3 net higher at Rs334 cr despite outgoes on acquisitions

Aditya Birla Group company Grasim Industries Limited has reported a consolidated net (after-tax) profit of Rs334 crore for the third quarter of the financial year ended 31 December 2014, compared Rs332 crore reported in the similar quarter of the previous financial year.

Grasim said after-tax profit would have been even higher without the provision for additional interest and depreciation cost on the acquired cement units. Excluding these charges, PAT has risen by 23 per cent to Rs410 crore.

Net revenue and profit before interest, depreciation and taxes (PBIDT) stood at Rs8,036 crore and Rs1,260 crore, respectively, a growth of 13 per cent and 10 per cent, respectively, from Rs7,117 crore and Rs1,143 crore, respectively, in the previous year quarter.

Growth in both volume and profitability has been led to a significant capacity increase in both the VSF and cement businesses, Grasim said.

The company commissioned its greenfield VSF project at Vilayat and commissioned 99K TPA capacity during the year while cement capacity increased by 4.8 million tonnes per annum with the acquisition of Jaypee cement units in Gujarat.

Cement grinding capacity of 1.4 million TPA went on stream in Karnataka while the company is ramping up 182,500 TPA capacity at the caustic soda plant and 51,500 TPA at the epoxy plant commissioned last year.

Grasim said the company is on track to ramp up operations and achieve targeted efficiencies at these units as anticipated, to deliver planned profitability.

Production of VSF at 105,834 tonnes has gone up by 15 per cent, with commissioning of plant at Vilayat. A steep fall in the price of cotton and PSF led to further pricing pressure on VSF.

This has resulted in lower PBIDT, partially offset by higher share of value added products and lower pulp cost, the company said.

The company's cement production at 11.31 million tonnes was higher by 9 per cent (including volumes from the acquired Gujarat units) as against Industry growth of 3-4 per cent. Net revenue increased to Rs5,,947 crore as compared to Rs5,170 crore in the corresponding quarter of the previous year.

Grasim said ongoing cost optimisation measures helped contain costs and PBDIT was higher at Rs1,058 crore and profit after tax was Rs400 crore vis--vis Rs928 crore and Rs395 crore, respectively.   

Grasim expects the VSF sector to face head winds for some more time due to the over capacity and sharp reduction in price of cotton and polyester.

The slowdown in new capacity additions in China would, however, lead to an improvement in industry utilisation which augurs well for the company.

Cement demand growth in the long term is likely to be over 8 per cent.

The key drivers will be revival of infrastructure projects supplemented by regulatory reforms and improvement in housing demand with the interest rate cut, it added.