Grasim Industries Ltd, an Aditya Birla Group company, on Saturday said that the company has reported a dip of 36.2% in its consolidated net profit to Rs 460 crore for the third quarter ended December 31, 2008 against Rs 721 crore in the corresponding period last year. ?Net profit was lower due to the weak performance by the viscose staple fibre (VSF) business and higher input and energy costs,? the company said in a statement.
The company?s net sales for the quarter stood at Rs 4,632 crore, up 6% as compared to Rs 4,350 crore last year.
Analysts had earlier estimated that the main area of concern for Grasim would be its VSF business, which had announced a 30% production cut at its Nagda (MP) and Kharach (Gujarat) plants, citing global slowdown of economic activity and rising inflation impacting the textile industry. In the second quarter FY09, Grasim?s VSF business reported a volume of 62,000 tonne. However, after the production cut announced in the end of October 2008, VSF volumes in Q3 dipped to 51,777 tonne. This was also a 27% drop year on year.
A day before the results were announced, Grasim?s shares were up 1.41% on Friday to close at Rs 1,197.30 on the BSE.
The performance of VSF business was adversely affected due to depressed consumer demand for textile globally, which cause the 22% dip in sales volumes. The company also scaled down its production considerably in view of the impaired sales. Operating profits and margins dipped due to lower realisation, higher pulp and sulphur cost and the weakening of rupee, it said.