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Home / India News / 2007 / January / January 23, 2007
Grasim, The Aditya Birla Group's Flagship Company Reports Excellent Performance for Q3FY 2007

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Grasim, The Aditya Birla Group's Flagship Company Reports Excellent Performance for Q3FY 2007

Mumbai, Maharashtra, India

Grasim, the flagship Company of the Aditya Birla Group, has posted a commendable performance for the quarter ended 31st December, 2006. Increased capacity utilization, strengthening of operational efficiencies and enriched product mix have been the major success drivers. The realisations in the Cement and Viscose Staple Fibre businesses have improved significantly.

Grasim's consolidated revenues soared by 46% at Rs.3,688 crores (Rs.2,520 crores). Notwithstanding a substantially higher provision for tax expenses, which was up by 221% at Rs.308 crores (Rs.96 crores), Net Profit rose appreciably from Rs.195 crores to Rs.555 crores, an increase of 184%.

On a stand-alone basis too, the results have been very impressive. While Revenues were up by 37% at Rs.2,279 crores (Rs.1,660 crores), Net Profit clocked a growth of 154% at Rs.412 crores (Rs.162 crores).

Viscose Staple Fibre (VSF) Business

The VSF business has improved its performance on all operating parameters. Capacity utilization was higher at 103%, as compared to 96% recorded for the corresponding period. Sales volumes were up by 2% at 67,061 tons, the highest ever recorded in any quarter.

The Company's VSF capacity at Nagda, Harihar and Kharach will stand augmented by 49,275 tons to 315,725 tons per annum by FY08, upon completion of expansion and modernization at a total capital outlay of Rs.721 crores.

The Company and its overseas Group companies, as reported earlier, have formed a Joint Venture company (Birla Jingwei Fibres Company Limited) in China together with Hubei Jing Wei Chemical Fibre Company. Plans are afoot to double its current capacity of 30,000 tons per annum to 60,000 tons per annum in about a year's time.

The growth in Indian textile industry and the thrust on high value niche fibres portend well for the VSF business. The integrated plantation-cum-pulp plant at Laos and the acquisition of St. Anne Nackawic Pulp Mill, would also contribute to increased cost competitiveness.

The outlook for the VSF business continues to be bright.

Cement Business

The Cement business' performance has been excellent, propelled by strong growth in demand and realisations. Capacity utilisation was higher at 112% (106%). Revenues increased by 55% led by strong realizations. The share of blended cement increased from 49% to 61%. Higher dispatches through rail (from 37% to 46%) helped partially mitigate the escalating freight costs.

The White Cement business too did well. Production was higher by 5% at 91,722 tons. Volumes were up by 3% at 93,571 tons. Realisations increased by 6% at Rs.6,456 per ton.

Cement Subsidiaries

The performance of UltraTech Cement Limited has been noteworthy. Its sale of cement stood at 3.57 Mn. tons and clinker at 0.77 Mn. tons. Domestic cement realisations at Rs.3,019 per ton increased by 50%. Net Profit grew by 573% from Rs.32 crores to Rs.214 crores.

Shree Digvijay Cement Company Limited has reported a satisfactory performance. Sales volumes were up by 3% at 2.48 lac tons. Realisations grew by 30% at Rs.2,783 per ton. Net Profit was at Rs.18 crores, an increase of 47%.

Cement Capex plan

The Company plans to enhance its Cement capacity by 8 Mn. tons per annum. This would be brought about by:

-- setting a Greenfield cement plant at Kotputli in Rajasthan (with a split grinding unit at Panipat in Haryana) of a total capacity of 4 Mn. tons per annum; and

-- setting up a new cement plant at Shambhupura in Rajasthan (with a split grinding unit) of a total capacity of 4 Mn. tons per annum.

The Company would be setting up thermal power plants at both these locations. These projects which involve a total capital outlay of Rs.2,495 crores, are progressing satisfactorily. The Shambhupura plant is expected to go on stream by end-FY08, while the Kotputli plant is expected to be commissioned in Q1FY09.

Modernization, de-bottlenecking at the Company's other Cement plants, setting up of grinding unit at Dadri (Capacity: 1.3 Mn. MT), RMC plants and captive power plants are some of the other projects on the anvil. This would entail an investment of Rs.1,168 crores spread over the next two years.

The strong growth in demand from housing and infrastructure sectors coupled with the increased industrial investment, should further stimulate the Cement business. The outlook for the Cement business, thus, continues to be encouraging.

Sponge Iron Business

The performance of the Sponge Iron business was better. Production was higher by 29% at 116,996 tons. The strong demand from end use sectors saw sales volumes increase by 50% at 147,339 tons. Higher prices of coal based sponge iron resulted in realisations growing by 6% at Rs.12,344 per ton.

Inadequate supply of natural gas continues to impact volumes. The firm scrap prices would have a positive impact on the realisations of the product. With the improvement in supply of natural gas expected by December, 2007, the business' prospects could improve thereafter.

Chemical Business

The Captive Power plant attached to the Chemical division remained shut for the entire quarter. This impacted production and consequently, sales volumes were lower by 34%. On the other hand, Realisations improved by 12% owing to higher Caustic and HCL prices, partially offsetting loss of contribution due to low volumes.

With the normalcy in plant operations restored in January, 2007, volumes are expected to improve. Realisations may however, be depressed in line with global prices.

The Company's focus will continue to be on optimum utilization of the plant capacity.


Given Grasim's leadership status in its key business segments and focus on expanding its capacities, the Company is poised for a significant growth in the years ahead. Measures towards cost optimization and effective financial management are also expected to raise the Company's performance levels further in the years to come.

To view the press release along with the tables please click on the links given below:

Press Release

Unaudited Financial Results

Dr. Pragnya Ram, Aditya Birla Group, +91 (022) 5652 5000

Source: Grasim Industries Limited (Business Wire India)

Press release presented here is sourced from the Source mentioned above and is provided on as-is basis. Please contact the Company / Source directly for any further information in regard to this release. This website will be unable to assist you in regard to the accuracy or correctness of information in this release.

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