Mumbai: Grasim, the flagship company of the Aditya Birla group, has posted excellent results for its third quarter on the back of improved performance from all its businesses. It has achieved a higher turnover of Rs 1,167 crore.

The gross profit has risen by 58 per cent to Rs 259 crore (Rs 164 crore). The profit after total tax expenses but before exceptional items is up by 68 per cent to Rs 134 crore (Rs 80 crore), even after making a substantially higher provision for tax expenses.

VSF business
The VSF business has sustained its show of good performance, with an all-round improvement during the quarter under review. While capacity utilisation was up at 109 per cent (86 per cent), sales volumes and realisations too were higher by 21 per cent and 3 per cent, respectively, over the corresponding quarter of the previous year.

The company's VSF research and application centre at Kharach, involving a capex of Rs 27 crore, is progressing as scheduled.

To ensure sustainable long-term growth, the VSF division's ongoing thrust is on product development and application enlargement. In this regard, its endeavours have met with considerable encouragement from the market. The company, being the largest and lowest cost superior quality producer of VSF, is fully geared to capitalise on the increased demand for the product that it has generated.

Cement business
The cement business has registered a noteworthy growth both in production and sales. The production at 2.72 million MT was up by 20 per cent over the corresponding quarter. Sales volumes reflect a growth of 13 per cent vis-à-vis the industry growth level of 7 per cent. Realisation was lower by 6 per cent at Rs 1,710 per MT in line with the general trend in cement prices.

A capex of Rs 218 crore has been earmarked for the current year, for setting up of two power plants of 23 MW and 12.5 MW capacity at Aditya Cement and Grasim (South), respectively, and for the ongoing modernisation and capacity expansion through de-bottlenecking. Of this, the company has already invested Rs 129 crore till the end of the current quarter.

On implementation of the modernisation and de-bottlenecking projects, Grasim's cement manufacturing capacity will stand raised to 13.40 million MT. The power plants at Aditya Cement and Grasim (South) are expected to be operational in Q4-FY03 and Q1-FY04, respectively.

The outlook for the cement business continues to be positive. The company's optimism stems from the renewed focus on the infrastructure sector by the government and the expected strong growth in the housing sector.

Chemical business
The performance of the chemical business has been notable. Capacity utilisation was higher at 103 per cent (91 per cent). Sales volumes at 41637 MT grew by 15 per cent vis-à-vis the corresponding quarter.

Despite the global decline in price of caustic soda, the company's overall (ECU) realisation was higher by 3 per cent, primarily due to the significant improvement in the realisation of its by-products. Going forward, the division aims to focus on optimum utilisation of the plant capacity and development of ancillary products for higher value addition and realisation.

Sponge iron business
The sponge iron business clocked an impressive growth. The increased supply of natural gas translated into improved capacity utilisation, which was higher at 66 per cent (61 per cent). Sales volumes at 1,65,707 MT were significantly up over the corresponding quarter. On the realisation front, too, the division has performed better. Prices at Rs 6,320 per MT were higher by around 17 per cent.

An increased demand for steel both in the domestic and international markets bodes well for the company's sponge iron business. The firm trend in scrap prices too should aid in improved performance of this business. However, availability of natural gas and its pricing continues to remain an area of concern for the sponge iron business.

Outlook
Grasim's outlook continues to be bright with all its major businesses chipping in with good performance. The company's focus on operational excellence, cost optimisation, effective financial management, continuous restructuring of business processes and the expected improvement in the cement sector are also expected to contribute in no small measure to the company's improved performance.