Grasim Industries on Monday reported a 1.5% YoY fall in standalone net profit for the quarter ended September to Rs 964.30 crore. However, the bottomline was higher than the ET Now poll of Rs 952 crore.

Revenue from operations rose nearly 37% YoY to Rs 6,745.24 crore.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter increased 19.4% YoY to Rs 956.61 crore, but margins contracted 206 basis points to 14.18%.

The fall in margins was due to a sharp rise in input costs and other expenses. While input costs increased over 48% YoY, other expenses were 48% higher from the year-ago period.

Revenue from the viscose staple fibre business increased 30% YoY to Rs 3903.14 crore, while the chemicals business reported a sharp 66.5% growth in sales to Rs 2708.48 crore.

VISCOSE BUSINESS

The global man-made cellulosic fibre industry witnessed a decline in demand in Q2 from the developed global economies due to high inflation-led recessionary market conditions.

China’s average viscose-staple fibre (VSF) operating rates reduced to 66% in Q2 from 76% in Q1 due to continued Covid-induced lockdowns in different cities and global demand decline. Globally, cotton prices continued to decline, with prices down 21% YoY.

The India-centric demand for VSF remained largely intact, but value chain partners for the global markets have started witnessing the impact of recessionary conditions, the company said in a release.

Nevertheless, VSF sales volume for the quarter rose 10% YoY, even though it was 14% down on a QoQ basis due to demand conditions coupled with cheaper imports from Indonesia and China.

CHEMICALS BUSINESS

Caustic soda sales volume rose 17% YoY in Q2 on the back of new capacities commissioned in the Oct-Mar period of 2021-22 (Apr-Mar). Global caustic soda prices softened sequentially in the last quarter, mainly due to the easing of global supply chain conditions. This has led to sequentially lower realisations in domestic markets too.

Captive consumption of chlorine increased during the quarter witnessing double-digit growth on a YoY basis. The business is working on plans to add new Chlorine value-added products in the portfolio to increase the chlorine integration levels.

PAINTS BUSINESS

The business is focused on the timely execution of the plan. The first plant is to be commissioned in Jan-Mar of FY24, and the remaining plants by FY25 in a phased manner. The construction work is in progress across five locations, and will commence at the remaining location in Jan-Mar of the current financial year.

CAPEX

Grasim Industries has spent Rs 1,524 crore on capital expenditure in April-September, of the budgeted Rs 6,720 crore for FY23.

Additional capex of Rs 565 crore has been approved by the board for the existing businesses, of which Rs 382 crore is expected to be spent in FY23, Grasim said.