Grasim net profit dips 20% despite rise in cement sales

Grasim Industries, an Aditya Birla Group company, recorded a 16 per cent rise in the June quarter's consolidated revenue from Rs 6,938 crore in the corresponding period last year to Rs 8,044 crore.

The margins were, however, under pressure, due to the pricing environment in both the viscose staple fibre (VSF) and cement businesses, given the present over-capacity. Net profit was down 20 per cent to Rs 487 crore.

The company said interest and depreciation had gone up with the commissioning of the various projects, the full benefits of which would be available gradually. The tax charge was also higher, due to lower exempt income and recent changes in law. Last year, the company had the benefit of the commissioning.

The company said its cement and clinker sales were up 14 per cent, outperforming the sector average, even as prices remained under pressure. The net revenue was Rs 6,032 crore as compared to Rs 5,296 crore in the corresponding quarter of the previous year. The profit after tax was Rs 627 crore (Rs 666 crore earlier).

Giving the outlook, the company said in the VSF sector, margins were likely to remain under pressure in the near term, due to the over-capacity in China. Slowing of capacity additions in China should lead to an improvement in industry utilisation, which augurs well for the company. The focus on cost optimisation will continue.

In cement, with the new government in place, the infrastructure sector has got a renewed focus, as announced in the recent Union Budget. The industry demand is slated to grow at seven to eight per cent, with double-digit growth expected in the second half of this year.

With additional capacity coming onstream in both the businesses, the company hopes to consolidate its leading position and benefit from the business environment turning positive, particularly for the construction industry.