Impact of lower realisations and higher input costs

Grasim Industries reported an 8 per cent dip in net profit for the fourth quarter ended March 31, 2012, at Rs.809 crore (Rs.879 crore). In a statement, the company attributed the dip in profit to lower realisations and higher input costs, mainly caustic soda and coal.

During the quarter, sales volumes of viscose staple fibre (VSF), its main product, grew 11 per cent led by higher exports, despite slowdown in the eurozone and new capacities in China. However, prices of VSF and other competing fibres were at their peak a year ago and VSF realisation for the quarter was down 16 per cent, the statement said. Cement sales volumes grew 9 per cent at 12.06 million tonnes.

Net sales were up 13 per cent at Rs.7,205 crore (Rs.6,398 crore). The operating profit was Rs.1,883 crore (Rs.1,480 crore) during the quarter.


The directors have recommended a dividend of Rs.22.5 per share (Rs.20) for the year 2011-12 when its net profit grew16 per cent to Rs.2,647 crore (Rs.2,279 crore). Revenue was up 17 per cent at Rs.25,244 crore (Rs.21,550 crore).

The operating profit increased by 17 per cent to Rs.6,320 crore (Rs.5,395 crore).


The company is raising VSF and cement capacities by 50 per cent and 20 per cent, respectively by 2014 which will translate into an additional 1.56 lakh tonnes of VSF and 10.2 million tonnes of cement capacity. In its outlook for VSF, the statement said, stability in the eurozone and macro-economic policies would influence demand. In its outlook for cement, it said, despite 8 per cent projected growth in demand, the surplus scenario was likely to continue for three years. In the present context, rising energy costs posed a challenge to both the businesses.

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