Grasim Industries rose 1.18% to Rs 836.55 after the diversified company said its consolidated net profit rose 3.30% to Rs 1,521.40 crore in Q2 September 2020 over Q2 September 2019.
On a consolidated basis, revenue from operations were almost flat at Rs 18,400.25 crore in Q2 September 2020 as against Rs 18,400.17 crore in Q2 September 2019. Profit before tax (PBT) skid 7.53% to Rs 1,872.76 crore in Q2 September 2020 as against Rs 2,025.39 crore in Q2 September 2019. Total tax expense for the quarter surged 24.43% to Rs 687.64 crore as against Rs 552.62 crore paid in Q2 September 2019. The Q2 result was declared after trading hours yesterday, 12 November 2020.
EBITDA for Q2 FY21 increased to Rs 3,660 crore, registering a growth of 40% Q-o-Q (quarter-on-quarter) and 15% Y-o-Y (year-on-year) respectively. The company said that the economy has been on the recovery path post relaxation of COVID-19 induced lockdown. It has been a resilient September 2020 quarter for Grasim Industries due to strong recovery in demand and the Government working relentlessly to support home grown businesses by injecting doses of fiscal and monetary stimulus on a timely basis.
The Viscose business has been on the recovery path since the end of Q1 FY21 with operating rates rising month-on-month (M-o-M). The capacity utilization of the VSF business touched 88% in Q2 FY21 from 26% in Q1 FY21 and recorded near 100% capacity utilization exit Q2. The VFY business has also recorded a significant improvement in the operational performance in Q2 FY21.
In the chemical business, the chlorine derivatives products demand remained strong driven by higher sales of Hygiene products & Disinfectants, Organic intermediates, Agrochemicals and CP segment. The Caustic Soda production staged a strong recovery in volumes during the quarter, the capacity utilisation improved to 80% in Q2 FY21 from 49% in Q1 FY21 with end use industries also witnessing recovery in their demand.
The excess supply of caustic soda has resulted in prices weakening to below $250 level (South East Asia). The Net Revenue for Q2 FY21 stood at Rs 1,126 crore and EBITDA stood at Rs 187 crore. The EBITDA for chlorine derivatives witnessed a double-digit growth sequentially.
Grasim has received additional capex approval of Rs 237 crore for Chemical and Viscose Filament Yarn (VFY) business. With this additional capex, the board has approved capex spend of Rs 1,852 crore for FY21. The capex includes raising capacities in VSF and Chemicals in FY22, apart from ongoing modernisation capex at various plants.
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Further, the board of Grasim Industries have on 12 November 2020 announced that the company has approved the divestment of its fertiliser business, Indo Gulf Fertilisers (IGF), by way of a slump sale to Indorama India (IIP), a subsidiary of Indorama Corporation, Singapore. The transfer of the business will be for a lump-sum cash consideration of Rs 2,649 crore, to be paid by IIP to Grasim Industries. This consideration is commensurate to the strength and future potential of the business.
Indo Gulf Fertilisers is engaged in manufacturing, trading, and sale of urea and other agri-inputs with a 1.2 million tonnes per annum (TPA) urea manufacturing plant at Jagdishpur in Uttar Pradesh (India). The divestment of the Fertiliser business is a significant value unlocking exercise for Grasim Industries. It will further enable the company to pursue growth opportunities in its core businesses.
Grasim Industries is a leading diversified playerwith leadership presence across many sectors. It is a leading global producer of Viscose Staple Fibre, the largest Chlor-Alkali, Linen and Insulators player in India. Through its subsidiaries, UltraTech Cement and Aditya Birla Capital, it is also India's largest cement producer and a leading diversified financial services player.
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