Strong demand push Grasim net up 25% to Rs 1,116 cr

Aditya Birla Group-run Grasim Industries today reported a 25 per cent jump in consolidated net profit at Rs 1,116 crore for the quarter to June, driven by strong demand and cost optimisation.

The company has announced a Rs 13,439-crore capital expenditure plan for the next three years to expand its viscose staple fibre and chemical and cement capacities as it sees the present spurt in demand to continue. Consolidated revenue jumped 71 per cent to Rs 16,857 crore during quarter.

"We have witnessed strong demand in our VSF, chemicals and cement businesses. Coupled with this continued focus on cost optimization helped us post overall better numbers," managing director Dilip Gaur told reporters this evening. The VSF business will continue to focus on expanding the market share by partnering with the textile value chain, he said, adding the chemical business is witnessing a healthy growth with the completion of the capacity expansion recently.

"Further growth is expected from the new capex plan for caustic soda expansion and new product lines for specialty chemicals," Gaur said. With the cement industry now in its up-cycle, demand is expected to be healthy, he said, adding the key drivers being higher government budget allocation for infrastructure and rural development, increased rural housing demand and pre-election spending, he added.

Revenue from cement during the period under review rose to Rs 9,021.41 crore from Rs 7,928.50 crore in the corresponding quarter. The overseas pulp JVs registered an improvement in operational and financial performance on the back of strong pulp realization and a continued focus on cost optimisation.

Commenting on capital expenditure, Gaur said, the Rs 13,439 crore capex will be spread over the next three years, and includes Rs 7,500 crore in VSF and chemical businesses. The VSF brownfield expansion includes debottlenecking that will cost Rs 4,257 crore.

It will also spend Rs 1,313 crore in brownfield expansion of its chemicals business. It will also spend Rs 5,900 crore in to up cement capacity, and also to modernize and upgrade the existing facilities apart from putting up logistics infra, he added. "A significant portion of the capex will be funded by internal accruals, Grasim Group chief financial officer Sushil Agarwal said. Its net debt stood at Rs 13,244 crore while the company has a liquid investments of Rs 8,355 crore. The Grasim counter closed flat at Rs 988.10 on the BSE, whose benchmark Sensex rallied 0.55 per cent.

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