Forbes India 15th Anniversary Special

Grasim Industries's Q1 revenues up by 15%

Net profit in the same period remains largely unchanged

Published: Aug 7, 2015 05:28:51 PM IST
Updated: Aug 7, 2015 05:57:21 PM IST
Grasim Industries's Q1 revenues up by 15%
Image: Vikas Khot
Kumar Mangalam Birla, chairman, Aditya Birla Group

Grasim Industries Ltd, a part of the Aditya Birla Group, reported a consolidated net profit of Rs 485 crore for the quarter ended June 30, almost unchanged from the net profit of Rs 487 crore in the same period last year.   

The Kumar Mangalam Birla-led company has the second largest capacity to manufacture viscose staple fiber (VSF), makes caustic soda, and also holds a 60.3 percent stake in the conglomerate’s listed cement-making firm UltraTech. Grasim’s consolidated earnings reflect UltraTech’s earnings, to the extent of the former’s holding in the company.  

Grasim’s consolidated revenues rose by 15 percent year-on-year to Rs 1,657 crore, aided by growth in turnover for all three businesses, notably the VSF segment. Its earnings before interest, tax, depreciation and amortisation (Ebitda) rose marginally by three percent to Rs 1,531 crore in the same period. The minor growth in operating profit was driven by higher Ebitda reported by the VSF and caustic soda manufacturing operations. Ebitda from the cement business fell marginally to Rs 1,282 crore in the April-June period from Rs 1,296 crore a year earlier.  

Grasim’s standalone business (excluding cement) posted a 21 year-on-year percent rise in Ebitda to Rs 238 crore and a 15 percent increase in revenues to Rs 1,657 crore. Net profit from the standalone business remained flat at Rs 106 crore.  

VSF, which is a substitute for cotton used in making textiles, did well due to “rising prosperity in emerging economies and high cotton prices in China (leading) to substitution”, according to Grasim’s latest investor presentation. An increase in prices of caustic soda in line with international prices aided earnings growth in the chemicals business. The cement business remained an underperformer with offtake, capacity utilisation and prices coming under pressure due to low demand in the absence of infrastructure growth.  

Grasim had a net debt of Rs 5,296 crore as on June 30 and a debt to equity ratio of 0.17:1 and a debt to Ebitda ratio of 0.86:1.    

The company’s share price gained 1.52 percent on the BSE to close at Rs 3,808.35 per share on Friday. The benchmark Sensex lost 0.22 percent to end the day at 28,236.39 points.