Grasim PAT rises on higher volumes

MUMBAI: Aditya Birla Group company Grasim Industries on Friday reported a growth of 40.75% in its consolidated profit after tax to Rs 795.70 against Rs 563.30 in the corresponding quarter last year.

Net sales during the quarter stood at Rs 4,788.35 crore, up 4.87% as compared to Rs 4565.93 crore in Q3 FY09, on the back of higher volumes though prices were lower. “Higher volumes have been the key growth driver for Grasim during the quarter,” said Adesh Gupta, wholetime director and CFO, Grasim.

During the quarter, new capacities contributed to 13% increase in production at 8.99 million tonne (mt) and sales volumes expanded by 14% at 9.21 mt. On a standalone basis, Grasim’s net profit increased by 81% at Rs 596 crore against Rs 330 crore in Q3 FY09 and net sales increased to Rs 3051.89 crore as compared to Rs 2658.77 crore in the same period last year. The consolidated as well as standalone results are not comparable with the results of corresponding quarter due to sale of sponge iron business in May 2009 and consolidation of Idea Cellular as an association from January 2009 onwards as against a JV earlier, the company informed.

Grasim’s shares on Friday slipped 1.97% to close at Rs 2607.60 on the Bombay Stock Exchange.

Gupta said, “A total capital outlay of Rs 4,110 crore has been earmarked for the cement business (including an outlay of Rs 2,040 crore for UltraTech). The company is expecting its second cement mill of 1.55 mt capacity to be commissioned in February 2010 in Rajasthan, after which the combined cement capacity of the company would rise to 48.8 mt,” he added.

Grasim currently has a market share of 21% in India and will spend about Rs 15,000 crore over a period of next 5 years to maintain the current market share.

“The company would require an additional capacity of about 25 mt over the next 5 years,” said Gupta. Grasim’s viscose staple fibre business production was up 58% during the quarter as demand grew and capacity utilisation was higher at 98%. The proposed demerger of cement business of Grasim into Samruddhi Cement is expected to be completed by March 2010 and Samruddhi with UltraTech is expected to be over by July 2010.