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Grasim net up 62 pc; to pay 80 pc

Our Bureau

MUMBAI, April 30

GRASIM Industries Ltd has ended 2000-2001 with a 62 per cent increase in net profit at Rs 377.9 crore compared to Rs 233.1 crore in the earlier year. The board has recommended a dividend of 80 per cent as against 70 per cent.

Net turnover was Rs 4839.8 crore as against Rs 4,289.7 crore.

In the fourth quarter, net profit rose by 204 per cent to Rs 145 crore from Rs 47.7 crore in the year-ago period. Net turnover stood at Rs 1,262.7 crore (Rs 1,101.2 crore).

Increase in profitability was attributed to higher turnover volumes with improved realisations, cost savings through modernisation and upgradation of plants. Besides, restructuring of high cost debts led to a reduction of financing costs.

``The excellent performance is due to improved scenario of cement, sponge iron, chemical business and stable performance of viscose staple fibre (VSF),'' said Mr. D.D. Rathi, Group Executive President and CFO.

Other income for the year was Rs 89.71 crore (Rs 71.23 crore). Total expenditure was Rs 4,017.96 crore (Rs 3,604.63 crore). Interest was Rs 238.78 crore (Rs 256.08 crore), depreciation Rs 251.90 crore (Rs 236.98 crore) and provision for tax Rs 50 crore ( Rs 12.35 crore).

During the year, VSF production rose to 218,847 tonne (188,002) while sales volume was 203,854 tonne (192,452 tonne). Realisations in VSF rose by 15 per cent. ``Higher realisation could absorb increases in input costs,'' Mr. Rathi said. Demand for VSF is expected to grow by 4-5 per cent.

However, acute water shortage has resulted in the closure of the fibre plant at Nagda. ``The company took a conscious decision to build up its inventory by running all its fibre plants at full capacity until mid-April,'' Mr. Rathi said. Inventories are e xpected to last until mid-July 2001 by which time rains would have commenced.

Operations at the Mavoor plant remained suspended since May 1999. The company has filed a scheme of arrangement in the Madhya Pradesh High Court seeking transfer of assets of the Mavoor units.

Grasim's grey cement production for the year stood at 9.10 million tonne (8.4 million tonne) while white cement output was 251,594 tonne (240,492). Grey cement sales volumes were 9.16 million tonne (8.42) and white cement 251,291 tonnes (240,014).

Realisations in cement were up by six per cent. Operating margins of this segment rose from 13 per cent to 17 per cent.

The outlook for the cement sector looks positive and demand is expected to grow by 7-8 per cent in the next three years, Mr. Rathi said.

Grasim's textiles division performance was subdued.

Sponge iron production declined to 663,998 tonne (709,094 tonne) and sales volumes were 673,852 tonne (822,996 tonnes). ``The outlook is positive and the company will focus on asset sweating,'' Mr. Rathi said.

Grasim's chemicals business turnover rose by 26 per cent. Caustic soda realisations moved up by 20 per cent because of increase in international prices.

However, operations of this division will be reduced by 50 per cent in the first quarter of the current fiscal on account of water scarcity.

The closure of the VSF and the caustic soda plant on the turnover will impact turnover to the extent of Rs 10-12 crore in the first quarter of the current fiscal.

During the year, the company earned a profit of Rs 18.44 crore on sale of its software division to its wholly-owned subsidiary company Birla Technologies Ltd.

The company's ROCE was 13.8 per cent (10.5), RONW 12.9 per cent (8.6) and debt equity ratio 0.62.

Rs 353 cr for capital expenditure planned

Grasim Industries, the flagship company of the A.V. Birla Group, has earmarked a capital expenditure of Rs 353 crore during the current fiscal.

The company has set up a capex programme of Rs 530 crore for the next two years.

Of this amount, much will be employed this fiscal mainly on its cement division, Mr. D.D. Rathi, Group Executive President and CFO, Grasim Industries, said.

The company is setting up a grinding unit at Bhatinda and also plans to add 3.3 million tonne in the next 18 months through change in product mix. Currently, the company's cement capacity stands at 9.86 million tonne.

Grasim is setting up four ready mix concrete (RMC) plants at an estimated cost of Rs 33 crore. These RMC plants are slated for completion in the first half of the current fiscal.

The Bhatinda plant's grinding units is to manufacture blended cement and is being set up at a cost of Rs 83 crore. This plant is expected to go on stream in the second half of the current fiscal.

Two power plants of 23 MW and 12.5 MW are being set up at Aditya Cement and Grasim (South) at a cost of Rs 146 crore.

The company will be investing Rs 268 crore on the ongoing modernisation and capacity expansion through de-bottlenecking. Another Rs 40 crore will be spent on fibre plants.

According to Mr. Rathi, the outlook for the cement sector looks positive and demand is expected to grow by 7-8 per cent in the next three years.

The company's cement division will focus on core markets of the North, West and the South.

A large part of the fund requirement will be met through internal accruals.