PRWire

Consolidated Net Profit (before Extraordinary gain) Rs.644 Crs. Up 15%Consolidated Net RevenueRs.4,715 Crs. Up 15%

Consolidated Financial Performance:

Rs. Crores

Q4

FY08

Q4

FY07

% Change

FY08

FY07

% Change

Net Revenue

4,715

4,090

15%

17,037

14,142

20%

Profit before Taxes (before Extraordinary gains & Minority Share)

1,118

1,009

11%

4,575

3,451

33%

Profit after Taxes

(before Extraordinary gains & Minority Share)

755

673

12%

3,111

2,359

32%

Profit after Taxes and Extraordinary gains

992

673

47%

3,348

2,359

42%

Less: Minority Share

111

115

457

392

Net Profit

881

558

58%

2,891

1,967

47%

EPS (Rs.)

Before Extraordinary gains

70

61

15%

290

215

35%

Including Extraordinary gains

96

61

57%

315

215

47%

Grasim Industries Limited has performed well during the quarter ended 31st March 2008. Revenues increased by 15% from Rs.4,090 crores to Rs.4,715 crores. Net Profit (before Extraordinary gain) was higher by 15% at Rs.644 crores (Rs.558 crores).

The FY 2008 results have been impressive. Revenues crossed US$ 4 billion mark, at Rs.17,037 crores (Rs.14,142 crores), a rise of 20%. Net Profit (before Extraordinary gains) rose appreciably by 35% at Rs.2,655 crores (Rs.1,967 crores).

Dividend

The Board of Directors of Grasim has recommended a dividend of 300% (last year: 275%). The total outflow on account of dividend, including Corporate Tax on Dividend, would be Rs.316 crores, vis-à-vis Rs.287 crores for FY07, an increase of 10%.

Highlights of Grasim’s operations:

Q4FY08

Q4FY07

% Change

FY 2008

FY 2007

% Change

Production -

Viscose Staple Fibre

M.T.

70,828

67,772

5%

279,901

246,833

13%

Cement

Mn. M.T.

4.20

3.88

8%

15.36

14.42

7%

White Cement

M.T.

120,433

97,116

24%

407,882

364,649

12%

Sponge Iron

M.T.

134,490

167,680

-20%

562,000

525,183

7%

Caustic Soda

M.T.

46,491

47,076

-1%

188,537

136,685

38%

Sales Volumes -

Viscose Staple Fibre

M.T.

61,650

68,588

-10%

269,781

250,725

8%

Cement

Mn. M.T.

4.27

3.92

9%

15.54

14.52

7%

White Cement

M.T.

114,845

102,200

12%

396,295

367,167

8%

Sponge Iron

M.T.

140,317

171,942

-18%

557,187

571,127

-2%

Caustic Soda

M.T.

44,872

47,709

-6%

187,356

137,677

36%

Viscose Staple Fibre (VSF) Business

Macro economic factors impacted the VSF business during the quarter. The deceleration in demand was primarily due to the slowdown of textile demand in USA and liquidation of inventory in the value chain. Additionally, the anti-dumping investigation by Turkey on import of VSF based yarn and the substitution effect on account of high VSF prices contributed to the subdued performance.

The performance of VSF business for the financial year as a whole was however, impressive. Production increased by 13% at 279,901 tons. Sales volumes were higher by 8% at 269,781 tons.

During the quarter under review, the Company expanded its VSF capacity at Kharach (Gujarat) by 63,875 tons. The Company’s VSF capacity thus stands increased at 333,975 tons. To meet the growing demand, the Company plans to increase its capacity at Harihar (Karnataka) by 31,000 tons at an outlay of Rs.335 crores, which is expected to be operational in Q3FY10. Also, an 88,000 TPA greenfield project is being pursued at Vilayat (Gujarat). The conversion of the AV Nackawic plant from paper grade pulp to rayon grade pulp is expected to be completed in Q2FY09.

Margins in VSF business are expected to remain depressed in the short to medium term due to rising prices of sulphur and pulp, coupled with softening of VSF prices.

Chemical Plant

The Chemical business posted a moderate performance during the quarter. Production was marginally lower at 46,491 tons. Sales volumes were lower by 6% at 44,872 tons on account of inventory buildup for planned partial shutdown.

For the year under review, the performance has improved. Production, which was affected in the corresponding year due to breakdown of a captive power plant, grew by 38% at 188,537 tons. Sales volumes too rose by 36% at 187,356 tons. Its performance would have been better but for the cost pressure on key inputs and fall in realisation.

Cement Business

The Cement business has recorded good performance during the quarter. Higher capacity utilisation resulted in production increasing by 8% at 4.20 million tons. Sales volumes were up by 9% at 4.27 million tons.

The performance for the year was equally encouraging. Both Production and Sales volumes grew by 7% at 15.36 million tons and 15.54 million tons respectively. However, the sharp increase in fuel cost led to lower operating margins. The Company continued its efforts to achieve over hundred percent capacity utilisation to meet the growing demand. Sequentially, the realisation remained flat despite increase in cost, leading to lower operating margins.

RMC (Ready Mix Concrete) volumes expanded by 62% in Q4FY08 and by 36% in FY08, buoyed by the rapid expansion in RMC network.

Cement Subsidiaries

UltraTech Cement Limited (UltraTech), a subsidiary of Grasim, performed well. Domestic Cement sales during the year were higher at 14.25 million tons, an increase of 7%. However, exports of Cement and Clinker were down by 25% from 3.48 million tons to 2.61 million tons.

During the quarter under review, Grasim sold its entire holding of 75,816,681 equity shares representing 53.63% of the capital of Shree Digvijay Cement Company Limited (SDCCL) to Cimpor Inversiones S.A., Spain at Rs.42.50 per share.

Cement Capex plan

During the quarter under review, the Company commissioned its following plants:

- 3.3 million TPA clinkerisation plant at Shambhupura (Rajasthan);

- 1.3 million TPA grinding unit at Panipat (Haryana); and

- 23 MW captive thermal power plant at Jawad (M.P.).

UltraTech too commissioned its 3.3 million TPA clinkerisation plant at Tadpatri (A.P.) during the quarter. Debottlenecking at existing locations saw both Grasim and UltraTech increasing their respective capacities by 2.40 million tons and 1.20 million tons during the year.

The expansions at Shambhupura and Tadpatri will be operational in H1FY09, while the Kotputli (Rajasthan) plant of Grasim is expected to go on stream in Q3FY09. Upon completion, the Company’s aggregate cement capacity (including that of UltraTech) will stand augmented at 48.7 million tons.

The significant increase in input costs will have an adverse impact on margins. Besides, the industry will experience a surplus of supply over demand on account of additional capacity of 118 million tons during the XIth Plan period which is expected to have an impact on domestic price in CY09. However, the strong momentum in demand would help in absorbing the increased supply in the long term.

Sponge Iron Business

Inadequate supply of natural gas coupled with the high prices of alternate fuels resulted in production being curtailed by 20% during the quarter at 134,490 tons. Sales volumes, as a result, declined by 18% at 140,317 tons. The surge in global scrap prices led to improved realisation. However, the gains on this account were offset by increase in prices of iron ore, naptha and propane.

Production of Sponge Iron during the year increased by 7% at 562,000 tons. Sales volumes were lower by 2% at 557,187 tons.

The outlook for the business is expected to improve with increased availability of natural gas by Q2FY09.

Outlook

Going forward, VSF and Cement will continue to be the growth enablers. Shoring up of its leadership position in the VSF and Cement sectors, cost optimization, maximization of asset productivity and prudent financial management will continue to be the Company’s hallmarks. The prospects for the Company continue to be positive.