12 Aug 2022
The profitability of Grasim Industries Ltd fell in the June quarter on higher operating costs, while the operating profit, sales and net profit rose sharply.
The Aditya Birla Group company reported a net profit of 8.1 bln rupees for the quarter ended June, up 68% on year. It was above analyst estimates of 5.2-6.1 bln rupees.
The sales jumped 93% to 72.5 bln rupees, and were above analyst estimates of 63.8-70.2 bln rupees
Grasim's operating profit, defined as earnings before interest, tax, depreciation and amortisation, also rose sharply by 69% on year to 13.6 bln rupees.
But a substantial rise in operating costs in Apr-Jun led to the operating margin contracting to 18.6% from 20% a year ago.
The cost of materials consumed jumped 83% on year to 33.4 bln rupees while power and fuel costs rose sharply by 92% on year to 12.3 bln rupees.
Grasim's revenue growth was aided by a doubling of revenue in its viscose segment to 43 bln rupees driven by a sales volume increase of 76% in viscose staple fibre to 197,000 tn and improved realisations in the segment. The viscose filament yarn volume was up 34% on year to 10,300 tn during the June quarter.
The company said that the viscose staple fibre growth in the June quarter was aided by around 51,000 tn contribution from its brownfield expansion at the Vilayat site.
In the company's chemicals segment, the volume performance was not great. The caustic soda sales were up only 17% on year to 278,000 tn while the chlorine and HCL consumption in value added products was up 34% on year to 86.7 mln tn.
The company said that average global caustic soda prices peaked at $769 per tn on the back of higher energy prices and supply chain disruption. A weak demand environment prevailed in the chlorine user industry in segments like dyes and pigments, and as a result the chlorine sales realisation continued to stay negative, the company said.
However higher sales realisation in the chemicals segment led to a 90% jump in revenue to 27.3 bln rupees.
The bottomline was mainly aided by the sharp rise in operating profit.
Tax expenses were 2.2 times higher at 2.1 bln rupees.
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