Grasim Industries Ltd, an Aditya Birla Group company, has announced that its net revenue has increased 17% to Rs. 6364 crore in the third quarter ended 31 December 2011, largely driven by its cement business. PBIDT grew by 23% from Rs. 1267 crore to Rs. 1554 crore. The company’s net profit rose by 33% to Rs. 669 crore.
The company’s cement subsidiary, UltraTech Cement, reported revenue of Rs. 4865 crore and PAT of Rs. 598 crore. The sector demand growth improved to around 10% during the quarter on account of a lower base effect in the corresponding quarter. The sector capacity utilisation during the quarter improved to 73% as compared to 68% in the preceding quarter. The pricing environment is expected to remain challenging.
Variable cost rose by 16%, mainly on account of an increase in energy cost. This is attributable to a 30% rise in the price of domestic coal during Q4 FY10-11, as well as the continuous increase in the price of imported coal, and the rupee devaluation by approximately 14%.
Meanwhile, the company has confirmed that the Chhattisgarh and Karnataka brownfield expansion projects, aggregating 9.2 million tpa, are on track. These projects are expected to be operational by Q1 FY14.
A total capex of Rs. 11000 crore is under implementation in the cement business towards the expansion projects, strengthening of logistic infrastructure, setting up of captive thermal power plants, ready-mix concrete plants and modernisation projects.
Looking forward, Grasim Industries expects the cement surplus scenario to subside gradually over 2 – 3 years with an expected growth in demand. Energy prices are expected to continue to increase as Coal India Ltd’s changed price mechanism comes into effect this month.