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Grasim Industries Limited, an Aditya Birla Group Company, today announced its results for the 4th quarter and the year ended 31 March 2015.
| Grasim has successfully implemented the following growth plans: |
Expansion projects commissioned :
- Viscose staple fibre: 120K TPA
- Clinker : 2 Mn. TPA ; Cement: 1.4 Mn. TPA
- Captive power / Waste heat recovery system (Cement Business): 72 MW
Acquisition completed :
- Merger of Cement units acquired by UltraTech in Gujarat: 4.8 Mn. TPA
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Plans under implementation include:
- Merger of Aditya Birla Chemicals (India) Limited (ABCIL): 352K TPA (Caustic Soda)
- Acquisition of two cement plants by UltraTech in Madhya Pradesh: 4.9 Mn. TPA
- Cement Grinding units to support clinker capacity already commissioned: 6 Mn. TPA
Total capacity after ongoing expansions and mergers: (Cement in Mn. TPA, other businesses in KTPA)
| Capacity |
31.03.2014 |
31.03.2015 |
Projected on
31.03.2016 |
Remarks |
| VSF |
378 |
498 |
498 |
Vilayat – Fully commissioned in Q4, being converted to specialty fibre |
| Caustic Soda |
452 |
452 |
804 |
ABCIL Merger will increase Caustic Capacity by 78 per cent and Chlorine Derivatives by 65 per cent |
| Chlorine Derivatives |
224 |
243 |
402 |
| Epoxy |
52 |
52 |
52 |
Production is being ramped up with customers’ accreditation |
| Cement |
57 |
63 |
75 |
Capacity to increase by 19 per cent |
Consolidated financial performance:
The expansion plans implemented by the company have started yielding results. The net revenue for the quarter is up by 5 per cent, with growth in all the businesses.
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Quarter ended
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Year ended
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31.03. 2015
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31.03. 2014
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31.03. 2015
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31.03. 2014
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| Net Revenue |
8,820
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8,418
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32,847
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29,323
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| PBIDT |
1,658
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1,655
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5,683
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5,491
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| Less: Finance Cost |
183
|
108
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667
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447
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| Depreciation |
417
|
389
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1,563
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1,457
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| Tax |
326
|
168
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1,016
|
735
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| Minority Interest |
261
|
341
|
838
|
883
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| Add: Share in Profit of Associates |
45
|
30
|
154
|
103
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| Net Profit (Excluding Exceptional Item) |
516
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679
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1753
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2,072
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| Exceptional Item* |
9
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–
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9
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–
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| Net Profit |
507
|
679
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1,744
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2,072
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| * Exceptional item represents the provision for diminution made in respect of Birla Lao Pulp and Plantations, Laos. |
PBIDT for the quarter 4 was maintained at Rs.1,658 crore, amidst difficult market conditions and gradual ramping up of new capacities. For the full year PBIDT is up by 4 per cent at Rs.5,683 crore.
Finance and depreciation costs have gone up by 69 per cent and 7 per cent respectively, on commissioning/acquisition of new capacities, the full benefit of which will accrue going forward.
Due to the increase in the rate of surcharge, an additional provision of Rs.58 crore was made on the accumulated brought forward deferred tax liability. The tax charge for the corresponding quarter last year was lower as provisions made in earlier years amounting to Rs.103 crore no longer required were written back.
The net profit for the quarter was lower at Rs.507 crore (Rs.679 crore). On a like to like basis (excluding the non recurring tax charges and Exceptional Item) the net profit was Rs.555 crore against Rs.614 crore last year.
Dividend
The Board of Directors of Grasim has recommended a dividend of Rs.18 per share. The total outflow on account of the dividend would be Rs.169 crore (inclusive of the corporate tax on dividend).
Viscose Staple Fibre (VSF)
With the commissioning of the greenfield plant at Vilayat, production stood at 1,11,341 tons, up by 24 Per cent. Sales volume was 1,18,486 tons. The global weakening of competing fibres (Polyester and Cotton) and the current overcapacity scenario, especially in China, has exerted pressure on VSF realisations. The impact was partially offset by lower pulp cost.
Due to the water shortage caused by deficient rains last year, operations of the VSF plant at Nagda are suspended from last week. The operations will resume with the onset of Monsoon. The working of caustic soda plant will also be affected partially.
Chemical Business
The Chemical Business reported a growth of 21per cent in sales volume during the quarter with additional volumes from the Vilayat plant. The ECU realisations were lower YoY in line with the international price.
As announced in February 2015, the merger of ABCIL with the Company (w.e.f. 1 April 2015) is on track. It is expected to be completed by Q3 of FY15-16 on obtaining requisite approvals.
Cement subsidiary (UltraTech Cement)
UltraTech’s net revenue for the quarter at Rs.6,597 crore was up by 4 per cent, compared to Rs.6,315 crore in the corresponding quarter of previous year. PBIDT was up by 3 per cent at Rs.1,435 crore (Rs.1389 crore). The increase in finance cost and tax expenses, as explained above, have resulted in lower PAT of Rs.657 crore (Rs.865 crore). The combined cement and clinker sales volume was 12.78 Mn. tons (12.98 Mn. tons). The benefit of softening coal prices was offset by the increase in the cost of limestone and other inputs due to a hike in limestone royalty and additional levies under MMDR Act.
Outlook
The outlook for the VSF sector remains challenging in the near term, given the over capacity in the sector and the sharp reduction in prices of polyester and cotton. The new plant at Vilayat with a higher share of speciality product will improve the product mix and profitability. The focus on cost optimisation will continue relentlessly. The company has launched brand LIVA and is actively working with the value chain, brands and retailers to expand the domestic market of VSF.
In the Chemical Business, the company will benefit from additional volumes and profit on the merger of ABCIL and the ramping up of Epoxy operations.
The demand for cement is expected to improve as it is linked with GDP. The key drivers will be the revival of infrastructure projects supplemented by regulatory reforms and improvement in the demand for housing with the softening of interest rates. The company with its existing and proposed capacity is well placed to benefit from the accelerated growth in the sector.
Grasim is well-poised to benefit from the expected upturn in the economy given its leadership position in all its businesses and large investments for growth.
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