Grasim Industries Limited: Implementing Next Phase of Transformational Growth Journey

KEY HIGHLIGHTS – Q3FY24

• Consolidated: Comparable EBITDA and PAT up 34% and 48% YoY respectively; driven by robust performance of Cement and Financial Services Businesses
• Standalone: Viscose business showed stable performance. Lower realisations in Caustic Soda business impacted the overall Standalone performance
• Viscose: VSF sales volume at 205KT up 34% YoY on exceptionally lower base in Q3FY23
• Chemicals:Brownfield expansion of 123 KTPA Speciality Chemicals (epoxy polymers & curing agents) commissioned at Vilayat in Dec’23, taking the total capacity to 246 KTPA
• Birla Opus:Trial runs commenced at three plants, on track for launch in the current quarter

Grasim Industries Limited today announced its financial results for the quarter and 9 months ended 31st December 2023. Consolidated Revenue is up by 12% YoY to Rs.31,965 Cr. driven by the performance of key subsidiaries: UltraTech Cement and Aditya Birla Capital. The Consolidated PAT was up by 48% YoY on a comparable basis. However, the sharp decline in realisations of Caustic Soda (in line with global market conditions) impacted the standalone performance.

CONSOLIDATED FINANCIAL RESULTS

STANDALONE FINANCIAL RESULTS

Viscose Business

China VSF Inventory levels have reduced to 10 days in Q3FY24 compared to 12 days in the previous quarter reflecting a marginal increase in demand. However global demand remained weak from the major consuming markets in the US/Europe leading to a decrease in prices of the fibre basket. International VSF average prices stood at $1.51/kg for Q3FY24, the lowest in the past three years. The VSF prices were down by 5% YoY and 3% QoQ compared to a reduction of 9% YoY and 5% QoQ in cotton prices.

Viscose business reported revenue of Rs.3,715 Cr. and EBITDA of Rs. 402 Cr. for Q3FY24 up 17% and 535% YoY respectively, though sequentially down by 4% and 14% respectively. The Company’s VSF volumes stood at 205 KT up by 34% YoY and down 2% QoQ. EBITDA margins improved YoY on the back of higher sales volume and a reduction in input prices. Viscose Filament Yarn (VFY) business margins declined due to lower sales volume and realisations on account of increasing imports from China.

Chemicals Business

International Caustic Soda average spot prices stood at ~$444/ton in Q3FY24 (up 6% from $417/ton in Q2FY24). Spot prices improved to ~$488/ton in Oct’23 but the quarter exit prices were at ~$423/ton.

Caustic Soda sales volume was up 5% YoY and down by 2% from the previous quarter to 299KT in Q3FY24. In line with international prices, ECU for the quarter was at Rs. 31,383/MT, down 2% QoQ and 33% YoY. Chemicals Business revenue at Rs.1,996 Cr., was flat on a QoQ basis and down 23% YoY. EBITDA for the quarter was up 12% QoQ to Rs. 264 Cr. (down 46% YoY) on the back of improved performance of chlorine derivatives business.

Speciality Chemicals (epoxy polymers and curing agents) volumes recorded growth of 5% YoY, though remained flat on a QoQ basis.

Birla Opus - Paints Business

The trial run for Birla Opus’s three plants has started. The sub-brand names have been finalised, and the development work for design, package artwork, and consumer communication has been completed. Birla Opus is implementing an integrated IT infrastructure and application for a seamless order to delivery experience. The painting service, branded as PaintCraft, has completed more than 150 sites by Dec’23. Supply Chain, Logistics and Distribution network has been set-up to support the launch in the current quarter.

Birla Pivot - B2B E-Commerce Business

Birla Pivot has received strong customer feedback for its private label tiles launched in the market. Plans are now afoot for the private label launch of ply and doors. The business crossed the milestone of a monthly run-rate of Rs.100 Cr. The Company is working towards a financial credit program for MSME vendors for their working capital requirements through suitable lending partner.

Capex and Projects

The capex for the quarter stood at Rs.1,425 Cr., of which Rs.1,088 Cr. was for the Paints Business. The Company successfully doubled Speciality Chemicals (epoxy polymers and curing agents) capacity to 246 KTPA in Dec’23. The groundbreaking ceremony of Lubrizol CPVC resin project at Vilayat was done in Oct’23.

Sustainability

Grasim’s Viscose business achieves #1 ranking in Canopy’s Hot Button Report 2023 for its commitment to conserving Ancient and Endangered Forests and promoting circular solutions. The Company has achieved the highest rating of 'Dark Green Shirt' for the fourth consecutive year. Further promoting circular solutions in the fashion industry, the company has made the first shipment of its Lyocell fibre, produced with recycled cotton for use in textile value chain in Turkey. The initial response has been very encouraging and a repeat order has been received. Viscose Kharach plant in Gujarat has successfully commissioned CAP (Carbon-disulphide adsorption) plant and CS2 recovery system from exhaust gases achieving the EU-BAT status.

We have maintained a share of renewable power at 11% in Q3FY24, compared to 8% in FY23. The Company continues to focus on reducing freshwater withdrawal using 47% of the total water requirement from recycled water.

Cement Subsidiary - UltraTech Cement Limited (UltraTech)

Cement Sales volume was up by 6% YoY and 1% QoQ at ~27.32 MTPA. Consolidated Net Sales was at Rs.16,740 Cr. compared to Rs.15,521 Cr. over the corresponding period of the previous year. Profit after tax for the quarter at Rs.1,777 Cr. is up by 68% YoY.

The Company has successfully completed its first phase of 19.9 mtpa of capacity expansion. Work on the second phase of 22.6 mtpa announced in Jun’22 is in progress and will start commissioning during Q4FY24 itself, ahead of schedule. For the third phase of growth of 21.9 mtpa announced in October 2023, major orders to key technology suppliers have already been placed and civil work has commenced on a few locations.

24% of the Company’s power requirements are met through green power sources. During Q3FY24, the Company commissioned an additional 26 MW of solar power taking its capacity of renewable power to 455 MW in addition to Waste Heat Recovery Systems of 264 MW.

Financial Services Subsidiary – Aditya Birla Capital Limited (ABCL)

Consolidated Revenue and PAT grew by 27% and 39% YoY to ₹8,800 Cr. and Rs.736 Cr. respectively. The overall lending portfolio (NBFC and HFC) increased to Rs.1,15,139 Cr. as of Dec’23, up 34% YoY and 6% sequentially. The total AUM (AMC, life insurance and health insurance) grew by 13% YoY to Rs.4,10,444 Cr.

The Company has integrated Udyog Plus with the ABG ecosystem to provide channel financing to their vendor partners. Udyog Plus has clocked disbursements of about Rs.180 Cr. till date with the ABG ecosystem contributing more than 60% of the business. The total AUM of Udyog Plus reached Rs.100 Cr. as of 31st December 2023.

Clean Energy Solutions Subsidiary – Aditya Birla Renewables Limited (ABReL)

ABReL reported revenue of Rs.92 Cr. for Q3FY24 improving by 32% YoY. Quarterly EBITDA stood at Rs.46 Cr. ABReL commissioned new capacity of 17 MWp taking the total capacity to 872 MWp as on 31st December 2023.