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Grasim Industries blames higher costs for 20% fall in profits

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World Cement,

Aditya Birla Group’s Grasim Industries has blamed higher operating costs for its 20.14% decline in consolidated net profit for the April – June quarter, which stood at Rs.487.13 crore. The company brought new capacity onstream during the quarter, commissioning two viscose staple fibre (VSF) lines and, for the cement business (UltraTech Cement), a 25 MW thermal power plant and a 6.50 MW waste heat recovery system at Awarpur, Maharashtra.

Net sales were up, at Rs.7976.34 crore – a 15.72% increase y/y, but finance costs rose 33% to Rs.126 crore and depreciation increased 4% to Rs.358 crore. The company said that the interest and depreciation costs went up with the commissioning of the various projects, and tax charges were also higher.

In July, World Cement reported that UltraTech Cement achieved a net profit of Rs.625.57 crore in the June quarter, down from Rs.672.60 the previous year. Prices remained under pressure, Grasim Industries said, partly due to overcapacity in the industry. The company renewed UltraTech Cement’s forecast for a 7 – 8% increased in cement demand, with double digit growth expected in the second half of this year.

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