Grasim net drops as margin pressures mount

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Grasim Industries Limited, an Aditya Birla Group Company, has reported Revenue of Rs 6,849 crore and Net Profit of Rs 450 crore in the 2nd quarter of FY 2014 vis-à-vis Rs 6,615 crore and Rs 620 crore respectively in the 2nd quarter of FY 2013.

The company's VSF business recorded a satisfactory performance, given the challenging market conditions.

Supported by capacity expansion at Harihar, production increased by 15% over last year, the company said in a statement to the Bombay Stock Exchange.

The combined cement and clinker sales volume was 10.03 Mn. Tons. Net Revenue from the division stood at Rs 4,870 crore (Rs 4,972 crore).

The divisions performance has been impacted mainly on account of lower selling prices as well as subdued demand owing to monsoon impact and low offtake from the infrastructure and housing sectors.

The benefit of softening in prices of imported coal was largely negated by the devaluation of the rupee. Optimization of the fuel mix helped in power and fuel cost reduction

"The VSF industry continues to face pricing pressure in the immediate term, given the surplus capacity in China. Capacity addition in China is expected to slowdown because of subnormal returns in industry currently. In Cement, the demand is expected to grow by 5% in FY 2014 due to the slowdown in the GDP growth rate. It however should recover to over 8% with the improvement in the economic environment," the company has said in a release.

"Capacity expansions in VSF and Cement will provide additional volumes, driving growth and further consolidate the Company's leadership. This will enable the Company to move forward rapidly, with the recovery in the market," a release from Grasim states.

The stock of Grasim was trading flat after the results.

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Read more about: grasim, aditya birla group, vsf, cement
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