the flagship company of the Aditya Birla group, has reported
a turnover of Rs 1,175 crore (Rs 1,136 crore) for the
quarter ended June 2003.
net profit after total tax expense was up by 24 per cent
at Rs 131 crore (Rs 105 crore), even after factoring the
substantially higher tax expenses, at Rs.50 crore.
despite the shutdown of two of its viscose staple fibre
(VSF) plants for nearly 45 days in the quarter, due to
an acute water shortage, Grasim has delivered such a performance,
is indeed commendable.
Given the good monsoon, the VSF plants at Harihar and
Nagda have since resumed operations. Lower capacity utilisation
at 71 per cent this quarter, vis-à-vis 82 per cent
in the corresponding quarter of the earlier year and a
15-per cent decline in sales volume is attributable to
the water shortage. Higher realisation and maximum cost-optimisation
have enabled the company to partially offset the impact
on its VSF operations.
provide a long-term solution to the water shortage, the
company has increased the height of its captive reservoir
at Nagda. Alongside, it is building a reservoir also at
Harihar. Going forward, these measures will help minimise
the impact of poor monsoons.
company has been aggressively growing the VSF business
through widening the product reach and application. It
has also formed strategic alliances with leading fabric
manufacturers. Positioning VSF at the premium end of the
market, as the ideal fibre in terms of feel, comfort,
fashion and hygiene, is ongoing. The Birla Viscose brand
has been very well established among the quality-conscious
company's VSF Research and Application Centre at Kharach,
which will be operational by 2005, is expected to further
bolster VSF usage. The total outlay for this centre is
Rs 27 crore.
In the cement business, production at 2.91 million MT
is up by 4 per cent and sales at 2.90 million MT have
risen by 5 per cent in comparison to the corresponding
quarter of the previous year. The share of blended cement
increased from 26 per cent to 43 per cent during the quarter.
The division has posted better operating performance,
despite realisation being stagnant.
division's capex for the financial years 2004 and 2005
is in the region of Rs 290 crore. The power plant at Grasim
South, commissioned recently, has entailed a cost of Rs
48 crore. The implementation of ongoing modernisation
and capacity expansion through de-bottlenecking will help
raise Grasim's cement capacity to 13.47 million tonnes
by FY 2004.
ongoing focus of the government on the development of
the infrastructure sector and the expected strong growth
in the housing sector augur well for the company's cement
The sponge iron business has posted a stellar performance,
recording an impressive growth of 12 per cent, both in
production and sales, in comparison to the corresponding
quarter of the previous year. Given the higher demand
for sponge iron from western markets, sales realisation
has risen considerably by 32 per cent, resulting in excellent
increase in operating profit and operating margins.
demand for steel is on the upswing both in the domestic
and international markets. The outlook for the sponge
iron business thus seems to be positive. A major concern,
however, continues to be the availability of natural gas
and its pricing.
The water shortage has affected the company's chemical
plant's operations as well. Capacity utilisation declined
to 57 per cent as compared to 76 per cent, and sales volumes
at 28,886 MT were down by 7 per cent as compared to the
corresponding quarter of the previous year. But despite
the steep fall in the international prices of caustic
soda and lower capacity utilisation, operating profits
have grown, largely on the back of increased ECU realisation
due to higher prices of ancillary products.
maintain operations at optimum level and improve profitability,
the company aims to focus on maximum utilisation of capacity
and R&D efforts towards development of ancillary products
for more value addition and value realisation.
in L&T's cement business
As a part of the proposal for the demerger of cement business
of Larsen & Toubro into a separate company, the company
proposes to acquire from L&T 8.5-per cent equity stake
in the proposed new cement company and to make an open
offer for purchase of an additional 30 per cent in the
equity of the new cement company. Post-demerger, the company
also proposes to sell to L&T foundation and trusts
its entire holding in L&T. The completion of the demerger
process and consequential acquisition/sale of shares is
subject to various statutory and regulatory approvals.
Grasim's strong fundamentals, its unrelenting focus on
operational excellence, cost optimisation, effective financial
management, continuous restructuring of business processes,
together with the expected
improvement in the cement sector, augur well for the company.
The prospects for Grasim continue to be bright, said a
company press release.