Grasim Announces Robust Hike In Net Profits From Viscose Sector

Company Performance

Grasim Announces Robust Hike In Net Profits From Viscose Sector

Viscose business yielded a net revenue in the FY19 quarter of Rs 10,325 crore for Grasim, which is 23% increase registered year-on-year. The EBITDA stood at Rs 2052 crore which is a 22% increase compared to the previous year’s quarter. The quantum leap in revenues was driven by better sales volume and realization. Grasim gave out its Q4FY 19 net revenue figure as Rs 2625 crore which is an 18% increase y-o-y. The corresponding rise in EBITDA stood at 3% with figure of Rs 413 crore. The VSF business reported record production and sales volume of 541KT in FY19 up 8% and 6% YoY, led by capacity debottlenecking. The figures for Q4FY19 production and sales volume stood at 130KT and 139KT respectively recording an increase of 15% and 13% YoY. The share of the domestic sales in the overall sales rose to 86% in Q4FY19 from 83% in Q4FY18. The Company’s popular VSF brand ‘Liva’ for the VSF business has been extended, to home textile category with launch of “LIVAHOME”. Today, Liva partners with over 40 retail brands and is available across 3,500 outlets in exclusive business outlets and large format stores in addition to many more MBOs in 250 cities of India. This has resulted in doubling the viscose fibre consumption in the country over past 4 years. Viscose business has been registering a double-digit growth in the last few years and market share of Viscose in overall fibre basket has gone up from 3.5% to 5% in the last four years. Value added Speciality Fibre line of 16 KTPA capacity based on in-house technology has been commissioned at Kharach in May 2019. Currently Grasim has a total capex plan of Rs 6454 crore at standalone level. The plan is under execution for raising capacities in both the VSF and Chemical businesses, apart from ongoing modernisation capex at various plants. The cash profit generated in FY19 is over Rs 3,400 Crore at standalone level. The Board of Directors of Grasim has recommended a dividend of Rs 7 per share against Rs 6.20 per share in the previous year. The total outflow on account of the dividend would be Rs 516 crore. Outlook The VSF business will continue to focus on expanding the market in India by partnering with the textile value chain, achieving better customer connect through its brand LIVA, extensions into new categories and enriching the product mix through a larger share of specialty fibre. However, the new capacities recently commissioned in Asia may create short-term demand supply mismatch and resultant pressure on prices.