The Hindu Business Line : Grasim net down 15% in second quarter

A DOWNTURN in its viscose staple fibre yarn and sponge iron businesses has led to Grasim Industries reporting a 15 per cent decrease in net profit for the second quarter of the current fiscal.

Net profit for the quarter amounted to Rs 187.65 crore against Rs 219.94 crore reported for the corresponding year-ago period.

Net sales for the quarter registered a rise of 6.8 per cent, at Rs 1,639.10 crore (Rs 1533.50 crore).

However, total expenditure at Rs 1,317 crore (Rs 1,134 crore) rose by 16 per cent. As a result, gross profit declined to Rs 328.9 crore (Rs 393.05 crore) although interest charges were considerably lower at Rs 23.74 crore (Rs 36.70 crore).

On a consolidated basis, net profit fell by 6.9 per cent to Rs 200.4 crore (Rs 215.2 crore), while net revenues showed a growth of 4.8 per cent, at Rs 2,327 crore for the quarter.

The consolidated results were impacted by flooding which affected its subsidiary UltraTech Ltd.

The VSF business was adversely impacted due to reduction of inventory, close of a plant and lower capacity utilisation.

While volumes were up four per cent, realisations were down nine per cent (on account of depressed cotton prices).

The company's cement business showed a three per cent increase in realisations and a seven per cent increase in volumes. Its chemical business, too, notched up a positive performance, volumes up by eight per cent and realisations by 22 per cent.

The sponge iron business showed a 26 per cent reduction in sales volumes and only a two per cent increase in realisations. This was due to rise in cost of production by more than 50 per cent due to disruption in supply of natural gas.

Going ahead the company's strong fundamentals, focus on cost optimisation and financial management and restructuring process, together with the expected improvement in the cement sector augur well for the company, said a news release.

The capex for the company and its subsidiary Ultratech for the next two years is Rs 1,700 crore, this will be mainly on its cement business, said Mr D.D. Rathi, whole-time Director, at a news conference here on Wednesday.

On the VSF front, the company will enter into the volumes game with expansion plans in the pipeline and backward integration.

The Grasim scrip rose by 3.58 per cent on the BSE today, gaining 39.8 points to close at Rs 1153.05 crore.

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