Aditya Birla Group company Grasim Industries on Monday posted a 7 % year-on-year increase in its consolidated net profit to Rs 890 crore for the three months ended June 30, 2017 on the back of strong performance across its three segments — viscose staple fibre, chemicals and cement. Consolidated net sales surged 8% y-o-y to Rs 9,846 crore, while the EBITDA (earnings before interest, tax, depreciation and amortisation) was up 9% to Rs 2,419 crore. EBITDA margins stood at nearly 25%, registering a growth of 100 basis points on a y-o-y basis. Commenting on the earnings, Sushil Agarwal, group CFO, Aditya Birla Group, observed that viscose consumption and growth has been better than other fibres, which is getting reflected in the numbers and realisation figures, despite cost pressures. As for chemicals, Agarwal said the company is increasing the portfolio of value-added products, which have larger chlorine consumption to substitute for the low industry-side consumption of chlorine.
The volumes of value added products surged 12% y-o-y to 1.08 lakh tonne, while the realisation for speciality fibre in the VSF business was up 11% y-o-y. Grasim’s cement subsidiary, UltraTech, reported an increase in consolidated revenue by 7 % at Rs 7,035 crore, while its EBITDA increased by 11% to Rs 1,798 crore. On the cost front, the increase in pet coke and fuel prices led to higher energy and logistics costs, offset to some extent by an improvement in operating efficiencies. The goods and services tax (GST) had a minimal impact on the company’s Q1FY18 performance, though there was destocking of inventory in the domestic market value chain in the VSF business ahead of GST implementation. However, Grasim Industries managing director Dilip Gaur said the company made up for the volumes by exporting more during the quarter.
As for capital expenditure, Agarwal said the company is working on investment plans for capacity expansion in the VSF business in addition to the ongoing de-bottlenecking of its plants to meet the growing consumer demand. In the chemicals business, brownfield expansion at the Vilayat caustic plant is progressing as planned. The commissioning of the plant is expected by March 2018. With de-bottlenecking under implementation at its other plants and the capacity of Aditya Birla Nuvo (ABNL) coming into Grasim’s fold, the total caustic soda capacity will increase from 840K TPA to 1139K TPA.
Meanwhile, with the sanction from NCLT for the composite scheme of merger of ABNL into Grasim and the demerger of financial services business, ABNL has merged with Grasim effective from July 1, 2017. The demerger of the financial services business has been rendered effective from the July 4, 2017. The allotment and listing of equity shares of Aditya Birla Capital (erstwhile Aditya Birla Financial Services) is in process.
Agarwal said the company is expecting to list the financial services business within Q2FY18, subject to all necessary approvals. “The activity which is pending is the allotment of shares of Aditya Birla Capital to the shareholders of new Grasim and then listing (financial services business). So, Grasim shareholders will get shares shares of Aditya Birla Capital in the next few days and the process of listing is already under way.”