Grasim reports excellent financial results for Q2 FY19

14 November, 2018

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Q2 FY19 Financial Performance
Consolidated revenue: Rs.16,795 crore; EBITDA: Rs.2,854 crore
Standalone revenue: Rs.5,118 crore - up 26 per cent YoY
Standalone EBITDA: Rs.1,352 crore - up 28 per cent YoY
Standalone PAT before exceptional item: Rs.817 crore - up 30 per cent YoY
Rs. in crore
  Standalone   Consolidated  
  Q2 FY19 Q2 FY18   Q2 FY19 Q2 FY18  
  26% 5,118 4,059 Net Revenue 16,795 9,846   24%
  28% 1,352 1,054 EBITDA 2,854 2,419   1%
  32% 1,113 845 PBT 1,636 890   3%
  30% 628 621 PBT 626 2,419   2%
      (Before Exceptional Items)      

The standalone cash profit for the quarter was Rs.1,041 crore up by 29 per cent YoY. The standalone PAT (after exceptional item) was (-) Rs.1,187 crore after considering a one-time non-cash exceptional item of Rs.2,003 crore. The consolidated PAT (after exceptional items) was (-) Rs.1,446 crore.

With the merger of Vodafone India Limited with Idea Cellular Limited, the company’s shareholding in the merged entity, Vodafone Idea Limited (VIL) now stands at 11.55 per cent. Consequently, VIL ceased to be an ‘Associate’ of the company with effect from 31 August 2018. Accordingly, the share in PAT of VIL has not been consolidated with effect from 31 August 2018. The exceptional item of Rs.2,003 crore represents the difference between Book Value and Fair Value of VIL as on 30 August 2018. This has been charged to the profit and loss account, consequent to VIL ceasing to be an ‘Associate’.

Viscose business
The net revenue for Q2FY19 at Rs.2,606 crore is up by 23 per cent and EBITDA at Rs.576 crore, rose by 23 per cent vis-à-vis the comparable quarter of the earlier year.

The VSF business reported quarterly production and sales volume of 137KT and 136KT respectively. The share of the domestic sales in the overall sales rose to 84 per cent in Q2FY19 from 70 per cent in Q2FY18, led by a robust demand.

The company continues to focus on operational excellence and achieving global standards in sustainability. The industry leading reduction in water consumption at its plants and benchmark product quality are steps in this direction.

The brownfield capacity expansion plan of 219 KTPA at Vilayat is progressing well. Significant ordering of the long lead items has been done. Work at site has commenced with the ground breaking ceremony in October 2018.

Chemical business
Caustic soda prices softened sequentially led by capacity restarts in China and Europe. The overall demand for caustic soda is expected to remain stable going forward.

The net revenue for the quarter rose by 38 per cent YoY to Rs.1,612 crore and EBITDA by 60 per cent YoY to Rs.456 crore driven by better realisation and higher sales volume. The management focus on increasing the volume of speciality products (chlorine-based value added products) continues.

The phosphoric acid plant of 29KTPA at Vilayat (Gujarat) has been commissioned, taking the total capacity of the company to 54KTPA.

Capex plan
The total capex plan of ~Rs.7,500 crore (at standalone level) is under execution for raising capacities in both the VSF and Chemical businesses, apart from maintenance capex at various plants. This capital expenditure will be incurred over FY19-FY21 and will be majorly funded by internal accruals. The cash profit generated in H1FY19 is over Rs.1,900 crore.

Cement subsidiary - UltraTech
UltraTech reported consolidated sales revenue of Rs.8,151 crore up 20 per cent (YoY) and EBITDA of Rs.1,446 crore in Q2FY19. The consolidated sales volume registered an increase of 18 per cent on YoY basis to 16.6 MTPA.

UltraTech has successfully completed the integration of 21.2 MTPA cement capacity acquired in July 2017. As the next phase of improvement, the company is exploring for the investments in WHRS systems at these plants.

UltraTech’s total capacity will stand augmented to 111.1 mn MTPA upon completing the ongoing expansion and the acquisition of Cement business of Century Textiles and Industries Limited and this includes overseas capacity. The said scheme of arrangement has been approved by CCI and the shareholders of both the companies.

Financial services subsidiary – Aditya Birla Capital Limited (ABCL)
ABCL’s revenue for Q2FY19 at Rs.3,590 crore recorded an increase of 33 per cent YoY. Net profit for the quarter was Rs.195 crore against Rs.225 crore in Q2 of the previous year. Compared to previous year, the net profit for Q2 FY19 includes an increase of Rs.34 crore mainly due to interest cost and brand spends at ABCL standalone. Additionally an adverse impact of Rs.42 crore has been factored given the change in the fair valuation of investments.

ABCL’s lending book (including housing) grew 30 per cent YoY to Rs.57,945 crore in Q2FY19 from Rs.44,675 crore (Q2FY18), backed by well-matched asset and liability mix. The lending book is of high quality with gross NPA of 93 bps and 71 bps in NBFC and HFC respectively.

Mutual fund assets under management reported 11 per cent growth at Rs.2.72 lakh crore YoY. Equity AUM are over Rs.1 lakh crore with steady market share of 9.04 per cent in Q2 FY19, despite the challenging market scenario. SIP book grew to approximately 29 per cent of equity AUM. The monthly SIP book (including STP) crossed Rs.1,000 crore: approximately 3x growth over last two years.

The Annualised Premium Income (APE) for Life Insurance business grew by 60 per cent YoY vs 10 per cent industry growth for H1 FY19. Persistency ratios are improving consistently. The 13-month persistency ratio improved by 6.4 per cent to 74.1 per cent in H1 FY19 over last two years.

In the Health Insurance business, gross written premium crossed Rs.100 crore in Q2FY19.

Outlook
The VSF business continues to focus on expanding the market in India by partnering with the textile value chain, achieving better customer connect through brand LIVA and intensive research work in enriching the product mix through a larger share of specialty fibre. To cater to the expanding market, the company has commenced brownfield capacity expansion at Vilayat as mentioned.

The Chemical business is witnessing a healthy growth with a good demand momentum in the downstream industries for both caustic soda and specialty products. To meet the increasing customer demand, the company has initiated a brownfield capacity expansion for caustic soda as well as specialty chemicals, taking the total caustic soda capacity to 1,310 KTPA by FY22.

In Cement, demand is witnessing an upward movement with higher spends on infrastructure and government sponsored programs. With the additional capacities acquired through the organic and inorganic route and its rapid ramp-up, UltraTech is very well placed to participate in the growth of the economy.

In Financial Services, ABCL has built a leadership position in a number of businesses. It is in the unique position of being able to provide Universal Financial Solutions to meet customers’ money needs for life. ABCL’s focused customer-centric approach under a single brand “Aditya Birla Capital” enables it to chart a differentiated and disciplined path to growth.

Cautionary statement
Statements in this “Press Release” describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities law and regulations. Actual results could differ materially from those express or implied. Important factors that could make a difference to the Company’s operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.

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