Grasim Net Slides 17% To Rs 274.56 Crore

Grasim's net profit has fallen 17 per cent to Rs 274.56 crore despite a 12 per cent growth in net sales to Rs 3,086.61 crore for 1996-97. EPS has plunged to Rs 37.97 from Rs 45.89, while sales growth dropped to 12 per cent from 33 per cent in 1995-96. Dividend has been hiked marginally to Rs 6.5 per share from Rs 6.25 per share.

The fall in viscose staple fibre production, which contributes 44 per cent to gross sales, low cement prices, high input costs and a decline in other income succeeded in pushing down profitability for the Aditya Birla group flagship.

From Rs 331.8 crore, net profit declined to Rs 274.56 crore, while treasury income, which had boosted profitability in the previous years, fell to Rs 152.91 crore, a 27 per cent decline.

The company spent nearly Rs 401 crore in 1996-97 on various investment and expansion programmes and had to draw down its investments, which was at Rs 619.22 crore in 1995-96.

Riding on a higher cement and sponge iron production, net sales rose 12 per cent to Rs 3,086.61 crore from Rs 2,742.12 crore. The growth, however, is lower than the 33 per cent recorded in 1995-96 over 1994-95.

A four per cent fall in VSF production due to a 46-month shutdown sent growth rates downward.

Grasim managed to considerably reduce its tax liabilities, which nearly halved from Rs 87.75 crore to Rs 41 crore.

The Aditya Birla group flagship went through a tough period in 1996-97 starting with the 46-day closure of the VSF plant at Nagda due to water shortage. Later flash floods at other plants at Mavoor and Harihar too affected production.

The company managed to improve production at its cement divisions after initial teething problems. Though the Jawad plant in Madhya Pradesh was operating at close to full capacity of 2.5 million tonnes, the new plant commissioned in 1995-96 at Shambhupura, Rajasthan, had been operating at less than 50 per cent.

The plant stabilised in 1996-97 increasing overall cement production from 3.2 million tonnes to 4.10 million tonnes, a 25 per cent growth.

Prices in central and northern India were weak throughout the year, resulting in lower realisations.

The star performer, however, was sponge iron, which overcame three years of hiccups to record a 94 per cent capacity utilisation. The plant, located in the Raigad district of Maharashtra, was shut for 100 days in 1996 due to a fire and production in 1995-96 was only 3.47 lakh tonnes, 46 per cent capacity utilisation.

Production in 1996-97 was 7.06 lakh tonnes. The company is upgrading the plant to enable it to use naphtha apart from natural gas, its current raw material.