Grasim reports improved performance for Q1 FY16 led by substantial investments across Businesses

07 August 2015

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Consolidated financial performance

Rs. in crore
	Quarter ended
	30.06.2015	31.06.2014
Net Revenue	8,599	8,045	7%
PBIDT	1,531	1,488	3%
PAT	485	487

Grasim has reported improved performance for the quarter ended 30 June 2015 amidst challenging market conditions. Its consolidated revenue has grown by 7 per cent at Rs.8,599 crore and EBITDA was up by 3 per cent at Rs.1,531 crore.

Viscose Staple Fibre (VSF)
Revenue increased by 15 per cent driven by higher sales volume at 103K MT, up 19 per cent. EBIDTA surged by 72 per cent at Rs.139 crore with expanded volumes and a decline in pulp and other input cost. The production at the newly commissioned Vilayat plant has ramped up. It achieved a capacity utilisation of ~82 per cent. The volume growth would have been higher, had there been no plant stoppage at Nagda for two months due to the water shortage. Operations at Nagda resumed from the last week of June 2015.

Chemical Business
In the Chemical Business, revenue soared by 17 per cent as Epoxy volume almost doubled with ramping up of plant utilisation. Caustic soda sales volume was maintained at 98K tonnes. EBITDA increased by 3 per cent at Rs.94 crore. The merger scheme of Aditya Birla Chemicals India Limited (ABCIL) with the company has been approved by the shareholders and creditors of both the companies. Post merger, the caustic soda capacity of the company will increase from 452K TPA to 804K TPA. The scheme will be effective from 1 April 2015 upon receipt of requisite regulatory approvals inter-alia from Competition Commission of India and High courts, expected by Q3 FY16. Therefore, the company’s results do not include EBITDA of Rs.78 crore and PAT of Rs.20 crore reported by ABCIL for the current quarter.

Cement Subsidiary (UltraTech Cement)
Amidst subdued demand in the cement sector due to slowdown in construction activities, UltraTech Cement has reported better performance. Its revenue for the quarter at Rs.6,432 crore was up by 7 per cent as compared to Rs.6,032 crore in the corresponding quarter last year. The combined cement and clinker sales volume was 13.0 Mn. tonnes against 12.4 Mn. tonnes last year. EBITDA was Rs.1,282 crore (Rs.1,296 crore) and net profit was Rs.591 crore (Rs.627 crore). With the reduction in fuel prices and higher pet coke consumption, energy costs declined by 7 per cent. Its benefit was partially offset by the increase in railway freight. Input prices remained stable, except for the rise in royalty on limestone and levies under the Mines and Mineral (Development and Regulation) Amendment Act, 2015.

Outlook
In the VSF Business, prices are likely to be influenced by the development in the industry in China amidst increase in the input prices and resumption of operations at some of the shut capacities. The company’s new plant at Vilayat with a higher share of speciality product will improve its product mix and realisations. The recently launched brand ‘Liva’ has met with good response from value chain and consumers. The company is closely working with the brands, designers and retailers to expand its domestic market.

In the Chemical Business, the scale of operations will rise significantly post the merger of ABCIL with the company.

In Cement, the demand is expected to be higher with the Government’s focus on infrastructure development, housing sector, smart cities etc and the softening of interest rates. The company is well positioned across the country to cater growth in demand.

The company enjoys a leadership position in all its businesses: Cement, Viscose Staple Fibre and Chemicals, which has been further strengthened having made an investment of US$ 4 bn over last five years. The company is well poised to reap the benefits of these investments with ramping up of capacity utilisation and expected upturn in the business cycle led by accelerated growth in the economy.

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.