Grasim Industries Ltd, an Aditya Birla Group company, reported a 27 per cent fall in consolidated net profit at Rs 450 crore for the September quarter against Rs 620 crore a year ago due to lower realisation in the viscose staple fibre (VSF) business.
Sales were up 4 per cent at Rs 6,849 crore (Rs 6,615 crore).
The company said fibre production was up 15 per cent at 91,995 tonnes, while sales volume increased 9 per cent to 93,025 tonnes, enabling it to reduce inventory.
Despite higher sales, revenue grew a moderate 4 per cent to Rs 1,211 crore due to constraints on realisations.
The construction of a new water reservoir ensured uninterrupted operations at Nagda, Madhya Pradesh, unlike last year, when the plant was shut for 11 days, said the company.
The rupee depreciation helped limit the decline in realisation to 4 per cent even as fibre prices declined 16 per cent in the international markets.
The excess VSF production capacity in China has created pressure on realisations in global markets even as the demand was showing signs of revival, said the company.
The rupee depreciation led to an increase in pulp costs. However, it was partially offset by declines in caustic soda and sulphur prices.
While sales volume in the chemical business increased 20 per cent to 78,356 tonnes (65,500 tonnes), profit at the operational level fell 8 per cent to Rs 62 crore (Rs 67 crore) due to lower realisation.
The cement business’ contribution to the consolidated net profit was down 49 per cent at Rs 169 crore (Rs 333 crore) as UltraTech Cement recorded a drop in profit.
Idea Cellular’s contribution increased 86 per cent to Rs 23 crore.
On a consolidated basis, the company’s gross debt was at Rs 10,130 crore and net worth at Rs 20,937 crore in the first half of this fiscal.
It has invested Rs 533 crore in VSF expansion and Rs 1,132 crore in the cement business in the first two quarters of this fiscal.
The company expects the surplus VSF capacity build-up in China to exert pressure on realisation.
It intends to cut production cost and launch new products to maximise returns. Shares of the company were down 0.22 per cent at Rs 2,806 on BSE on Wednesday.
suresh.iyengar@thehindu.co.in