Grasim plans Rs4,000 cr capacity expansion in 2016-17

Aditya Birla Group firm Grasim Industries will spend more than Rs4,000 crore on capacity expansion of its various businesses, including cement, chemicals and VSF, in the coming financial year, 2016-17.

Grasim Industries, which is the largest producer of viscose staple fibre (VSF) in the country, however earns 90 per cent of its revenue from its cement business. VSF finds use in the manufacture of apparels.

Grasim will invest a bulk of the proposed investment – Rs3,800-crore – in its subsidiary, cement maker Ultratech, it will also invest Rs255 crore in the VSF and chemicals business during the year.

Of the Rs3,800 crore earmarked for cement capacity expansion at Ultratech, the company plans to spend Rs2,140 crore this fiscal.

The expansion comes on the back of of a Rs1,630 crore capex on capacity expansion, logistic infrastructure, modernisation, upgradation and its ready mixed concrete business during the April-December period.

The company had earmarked Rs450 crore for investment on the VSF and chemicals business 2015-16 fiscal. Of this, it had spent Rs310 crore in the first nine months of the financial year, Grasim said in a regulatory filing.

The company will be spending around Rs4,055 crore on capex in the 2016-17 fiscal, against Rs2,590 crore in 2015-16 and Rs6,645 crore till March 2015, it release added.

For the October-December quarter of this fiscal, Grasim Industries said all its businesses - VSF, chemical and cement - posted encouraging results and investments made on capacity expansions and acquisitions are yielding results.

Grasim had reported a turnover of around Rs32,838 crore in the 2014-15 fiscal.

The company's total income rose to Rs9,044 crore in the December quarter from Rs8,035 crore during the same quarter in 2014-15. It had posted a net profit of Rs650 crore against Rs334 crore during the October-December 2015 quarter.

Going ahead, Grasim said, in the VSF segment, it will continue to focus on expanding domestic market through product development activities, working closely with brands, designers and retailers.

Grasim expects cement demand to pick up in the near term with the government's focus on infrastructure development, housing sector, smart cities and roads.