Grasim Q2 profit dips 7.5% to Rs416.38 cr on higher tax outgo

Company had clocked Rs 450.33 crore net profit in the same quarter last fiscal

Grasim Industries, an Aditya Birla Group Company, today reported 7.5% drop in net profit at Rs 416.38 crore for the July-September quarter due to higher interest and depreciation.

Company's consolidated revenue, however, rose by 16% to Rs 7,945 crore in the second quarter of FY15 as against Rs 6,850 crore in the same quarter of previous year, driven by robust volume growth in all the businesses supported by new/acquired capacities, a company statement said here.

The company, which has interests in areas such as cement, viscose staple fibre and chemicals, had clocked Rs 450.33 crore net profit in the same quarter last fiscal.

Interest and depreciation were higher, on account of the commissioning of projects in its cement and VSF businesses (Viscose Staple Fibre) along with the acquisition of 4.8 million TPA (tonnes per annum) cement capacity in Gujarat in the first quarter. Consequently, PBT was up by 5% at Rs 700 crore as against Rs 666 crore.

Tax expenses were higher for the current quarter compared to the corresponding quarter last year, as there was a write back of tax provision and commissioning of power plant leading to lower tax liability, the release said.

Tax expenses too went up to Rs 153.43 crore from Rs 123.96 crore, the company said in a BSE filing.

VSF business achieved record sales volume of 100,927 tonnes, up 8%, supported by the commissioning of two lines at Vilayat in Gujarat plant.

Concerted market development activities have led to market expansion in the domestic segment.

Commenting on the future outlook, the company said, in the VSF sector, margins are likely to remain under pressure in the near term due to the overcapacity in China. Sharply declining cotton and polyester prices is a major challenge and may impact the growth of VSF consumption.

The slowdown in new 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 relentlessly.