Grasim Inds

The company has posted a dismal set of numbers for Q3FY14. Its consolidated net profit fell 39% (YoY) at Rs.332 crore due to overall weak operational performance. Net revenue rose 5% at Rs.7067 crore. The 40% drop in other income also went on to dent the bottomline. EBITDA was down 22% at Rs.984 crore. The worst fall was in the EBITDA margin which literally plunged into an abyss, down 480 bps to 13.9%.

In terms of segmental performance, VSF business recorded volume growth, supported by increased capacity at Harihar. Production increased by 4% and sales volume rose 24%. But a surge in the price of imported pulp, its main raw material and rupee deprecation dented its margins. Further, tanti-dumping duty levied in China impacted realisations and the volumes of pulp sold in China. The combined cement and clinker sales volume increased marginally at 10.76 Mn. tonnes. The industry volumes remained flat due to the continued slow down in the Indian economy. Cement business contributed 73% to total revenues while VSF 22%. Its Chemical business reported a growth of 14% in sales volumes. ECU realisations improved over Quarter 2 but were flat on a YoY basis. The operations at Vilayat (Gujarat), which were impacted by the floods, have resumed in December 2013 and are being ramped up in a phased manner.

Its Epoxy project (51,500 TPA) at Vilayat was commissioned in December 2013. The VSF project (120,000 TPA) at Vilayat is expected to go on stream in a phased manner from current Q4. In cement, with the commissioning of the grinding unit (1.6 million tonnes per annum) at Jharsuguda, Odisha in October 2013, UltraTech's cement capacity stands augmented to 55.5 Mn TPA. On commissioning of all the projects currently under implementation and the acquisition of Gujarat cement unit of Jaypee Cement Corporation, the total cement capacity will increase to 70 Mn TPA. In Ultratech Cement, where Grasim holds 60.29% stake, approved the acquisition of the two Gujarat cement units of Jaypee Cement Corporation (JCCL) in September, 2013 at enterprise value of Rs 3,800 crore. The transaction is going to be completed by Q1FY15