Cement fuels Grasim net

CORPORATE SCORECARD

Grasim Industries, the flagship of the Aditya Birla Group, today reported 54per cent growth in net profit for the quarter ended June 30 this year on the back of a 26 per cent rise in revenue.

Attributing the better-than-expected results to robust growth in cement, which brings in 70 per cent of its revenues, and viscose stable fibre businesses, the company said rising demand would continue to fuel growth even as the rapid capacity additions could create a surplus by the middle of 2008-09.

Grasim, along with subsidiaries UltraTech Cement and Shree Digvijay Cement, is part of telecom-to-insurance conglomerate Aditya Birla group, which is India's largest cement producer.

Grasim is investing Rs 7,425 crore over the next three years to increase its cement making capacity to 48 million tonnes from 31 million tonnes at present.

The cement industry has had it good for some time, with plants running at full capacity to feed the fast growing economy.

On a consolidated basis, which is, incorporating the performance of its subsidiaries, Grasim's net profit rose to Rs 670 crore from Rs 435 crore in the previous corresponding quarter. Its net sales, during the period, grew to Rs 4,063 crore from Rs 3,213 crore.

On a standalone basis, the net profit growth was even steeper "� 64 per cent "� to Rs 511.66 crore from Rs 311.9 crore. Net sales rose to Rs 2,444.79 crore, up 29.24 per cent from Rs 1,891.73 crore.

Fibre sales grew 34 per cent and the cement business 12 per cent. The appreciating rupee against the dollar benefited the VSF business.

The company's chemical plant bettered its performance during the quarter with production of caustic soda moving up by 39 per cent to 42,843 tonnes.

However, the business got affected on realisation and registered a fall of 10 per cent owing to decrease in the prices of allied products. This business is expected to remain under pressure due to upcoming capacities of caustic soda.

The expansion of Grasim's VSF business is progressing on schedule. It is adding new capacity of 63,875 tonnes a year in Gujarat, which is expected to go on stream by the end of this financial year. The company also plans to increase capacity at its Karnataka plant by 31,000 tonnes a year. This will take the overall VSF capacity to 3,65,000 tonnes a year.

The company's shares had risen 26.1 per cent in the April-June quarter, outperforming a 12.1 per cent rise in the benchmark index.

ROCK SOLID

The cement and VSF businesses pushed up profitability by 12 per cent and 34 per cent, respectively

To spend Rs 4,085 crore on cement to scale up capacity by 10 million tonnes to 24 million tonnes in two years

It is also raising VSF capacity in Gujarat and Karnataka to 3,65,000 tpa

To hive off its textile units at Bhiwani in Haryana, subject to the shareholders' approval