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Grasim, the Aditya Birla Group's Flagship Company Reports Excellent Performance for Quarter Ending September 2002

  • Friday, October 25, 2002 6:00PM IST (12:30PM GMT)
Mumbai, Maharashtra, India:  Grasim, the flagship Company of the Aditya Birla Group, has reported a higher turnover of Rs. 1113 crores (Rs. 1108 crores) for the quarter ended September, 2002.

-- Gross profit has risen by 49 % at Rs. 244 crores (Rs. 163 crores).

-- Profit after total tax expenses but before Exceptional Items is up by 55 % at Rs. 130 crores (Rs.84 crores), even after factoring the substantially higher provision for current taxes.

VSF Business

The VSF business has posted an excellent performance during the quarter under review. Capacity utilization was up at 110% (70%). Sales volume was up by 38%, but realization was lower by 4%.

To spur the demand for its superior quality VSF in terms of feel, comfort, fashion and hygiene, the fibre division's efforts relating to application development are gaining momentum. This strategy which the Company has been pursuing in the recent past, is yielding good results.

To spawn customer-centric innovations, the Company's proposed VSF Research and Application Centre at Kharach, involving a capex of Rs. 27 crores, is progressing as scheduled.

Cement Business

Both in sales volumes and production, the cement business has put in an impressive performance. Sales volume which is 20% higher over that of the comparable quarter in the previous year, surpassed the industry growth level of 13%. Production too at 2.60 Mn MT vis-à-vis 2.22 Mn MT has risen by 17%.

However, lower cement prices have adversely impacted operating margins, which could be offset only partly by larger sales volumes.

A capex of Rs.263 crores has been earmarked for the current year, for setting up of two power plants of 23MW and 12.5 MW capacity at Aditya Cement and Grasim (South) respectively, and ongoing modernization and capacity of plants expansion through de-bottlenecking. On implementation of these projects, Grasim's Cement manufacturing capacity will stand raised to 13.40 Mn. MT. The power plants are expected to be operational by the end of the current financial year

The outlook for the cement business is positive. The Company's optimism is fuelled by the steady GDP growth, infrastructure investment and the demand for housing.

Chemical Business

The capacity utilization of the chemical plant at 99% (83%) has been noteworthy. Sales volumes at 38638 MT grew by 13% vis-à-vis the corresponding quarter. The overall (ECU) realization is lower by 9%, due to the falling international prices of caustic soda. Development of ancillary products for more value addition and improved realizations are the Division's planks, going forward.

Sponge Iron Business

The sponge iron business has posted a commendable performance. The plant's utilization has been higher at 70% (56%) with increased supply of natural gas. Sales volumes kept pace with production which stepped up by 18% over the corresponding quarter of the previous year. Better operational efficiencies and an enhanced demand for Sponge Iron from Western markets have been the major growth drivers.

As the demand for steel is growing both in the domestic and international markets and scrap prices are firm, the outlook for the Sponge Iron business is encouraging. Availability of natural gas and its pricing however continues to be an area of concern for the Sponge Iron Business.


Grasim's fundamental strengths, its ongoing focus on operational excellence, cost optimization, effective financial management, continuous restructuring of business processes and the expected improvement in the cement sector, bode well for the Company. The prospects for the Company continue to be bright.

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