Grasim Industries, the flagship company of the Aditya Birla group, has decided to curtail its production of viscose staple fibre (VSF) by 30 per cent from the current level. These production cuts will come at its Nagda (MP) and Kharach (Gujarat) plants.
In a statement, the company said, "Due to global slow down of economic activity and rising inflation, the textile industry world wide has slowed down." Considering the impact of recent financial crisis which has increased the trade credit risk factor, production cut has been decided, added the statement.
Grasim has a capacity of 3,33,975 tonnes per annum in VSF business. The company also has its presence in cement, chemicals and sponge iron.
The quarter ended September has seen Grasim's net profit plunge by 22 per cent from Rs 620 crore to Rs 486 crore. During the quarter the sales volumes of VSF took a hit of 11 per cent where as PBIDT margin fell to 21.4 per cent from 40 per cent.
The company stated that in VSF business, realisation was down and operating profits and margins were significantly down due to lower volumes, weakening rupee, unprecedented increase in sulphur prices and inability to pass on cost increase to customers.
In its outlook on VSF, the company said that demand is expected to remain subdued in the short to medium term till improvement in global economic situation and prices likely to remain at current levels with margins remaining in range bound pattern.
