Grasim consolidated net profit at Rs 549 cr in Q3
Total income stood at Rs 6,945.75 crore for the quarter ended December 31, 2012 where as the same was at Rs 6,505.20 crore for the quarter ended December 31, 2011.
The company has posted a net profit of Rs 197.95 crore on stand alone basis for the quarter ended December 31, 2012, against Rs 274.48 crore for the quarter ended December 2011.
Total income has decreased to Rs 1,299.09 crore for thequarter ended December 31, 2012, from Rs 1,352.12 crore for the quarter ended December 31, 2011, a company said in a filing to BSE.
Given the challenging global and domestic market conditions, the company has performed satisfactorily, a company statement said.
The company said that results for the current quarter were not comparable as financial results of UltraTech Cement, the cement subsidiary, for Q3 FY 2011-12 included subsidies amounting to Rs 86 crore for the earlier period, and Grasim's proportionate share amounting to Rs 25 crore in the loss incurred by the recently acquired pulp JV, AV Terrace Bay, Canada is included in the current quarter.
The company said that the market conditions for the textile industry, the key consumer of Viscose Staple Fibre (VSF), continued to be challenging. This was compounded by the surplus VSF capacity in China and depressed cotton prices.
Despite the difficult environment, sales volumes of company's VSF division at 78,579 tonnes have been sustained.
However, volumes during the nine months have grown by 14 per cent. Global VSF prices declined sharply by 14 per cent as compared to Q3 last year. The rupee depreciation has reduced its impact in the domestic market to some extent.
The performance of pulp joint ventures was also adversely affected due to the decline in realisations and volumes.
AV Terrace Bay, Canada, the pulp JV acquired in Q2 FY 2012-13 with Grasim holding a 40 per cent stake, commenced operations in October, 2012, as planned. Its losses are expected to be reduced and converted into profit in a phased manner through mill upgradation and cost optimisation.
The company's cement subsidiary, UltraTech has reported satisfactory performance for the quarter.
Cement sales volumes were maintained at 10.4 million tones as demand remained subdued. Net revenue stood at Rs 5,164 crore as compared to Rs 4,800 crore, up by eight per cent.
The increase in railway freight and hike in diesel prices led to higher costs of raw materials and logistics. The softening in prices of imported coal and fuel mix optimisation helped in reducing energy costs, though rupee depreciation partially offset the benefit, the release said.
The company's brownfield expansions at Chhattisgarh and Karnataka totalling 9.2 million tonnes per annum cement capacity are on track. Clinker capacity is expected to be completed by Q1 FY 2013-14. Consequently, UltraTech's cement capacity will stand augmented to 62 million tonnes per annum.
Commenting on the outlook, the company said that the prevailing global economic conditions, coupled with the surplus capacity in China, the VSF industry is expected to remain under pressure for some more time.
However, in cement, the long term demand is expected to grow by an average eight percent with housing, infrastructure and allied spending being key value drivers.
Industry capacity utilisation is likely to improve to 80 percent in FY 2016 as the pace of capacity addition will slow down. Input cost is likely to increase in line with the general inflation with margins remaining range bound.
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