Net profit at Grasim Industries plummeted 58.5 per cent to Rs 31.63 crore for the second quarter ended September 30, 2001, compared with Rs 76.37 crore posted in the same period last year.
This is primarily due to an exceptional charge of Rs 52.4 crore on account of loss on closure of the company's Mavoor unit near Kozhikode, Kerala, and retrenchment compensation and employee separation costs.
The unit's closure will help Grasim save around Rs 27 crore annually.
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Sans this charge, Grasim has reported a 1 per cent increase in its net profit for the second quarter at Rs 84 crore against 82.8 crore last year if the extraordinary items are not considered.
D D Rathi, CFO, Grasim, said, "We need to consider the results on the basis of the current economic scenario. Our performance, which is strongly driven by the cement unit, has been satisfactory in the context of the current domestic and economic slowdown."
The interest outgo for the quarter was down 21 per cent at Rs 47.85 crore against 60.49 crore in the corresponding quarter last year.
"We have maintained a declining trend in interest charges due an effective working capital management. Besides, we have reduced our debt burden by Rs 50 crore during the quarter," Rathi said.
The turnover marginally increased to Rs 1,207.17 crore from Rs 1,192.15 crore despite lower VSF and sponge iron volumes.
Other income of the company was down 7 per cent at Rs 19.7 crore against Rs 21.24 crore last year. The freight expenses increased from 114.27 crore to Rs 133.09 crore.
"The contribution of cement to the company's turnover has increased by 4 per cent. This has led to an increase in out freight charges, "Rathi said.
Meanwhile, the company is exploring ways to expand its VSF market. Shailendra Jain, director, Grasim, said, "We are looking forward to a market of around Rs 7000 tonne per annum. We are focusing on a `business partner relationship' with leading manufacturers of branded products to fuel growth in this sector."
During the second quarter cement contributed around 40 per cent, VSF & pulp 31 per cent, sponge iron 6 pert cent, textile 7 per cent, chemicals 5 per cent and others 11 per cent of the turnover.