Grasim profit declines 16

MUMBAI, MAY 5: The net profit of Aditya Birla group's flagship company, Grasim Industries, has declined by 16 per cent to Rs 230.78 crore in...

MUMBAI, MAY 5: The net profit of Aditya Birla group8217;s flagship company, Grasim Industries, has declined by 16 per cent to Rs 230.78 crore in the fiscal 1997-98 as compared to Rs 274.56 crore recorded in the previous fiscal. The drop in net profit comes despite a 13.3 per cent growth in net sales for the fiscal 1997-98. The company has attributed the downturn in the economy as the main reason for the sagging profits.

The board of directors of Grasim has recommended a dividend of Rs 6.75 per share as compared to the Rs 6.50 dividend paid in previous fiscal. Shailendra Jain, president of Grasim Industries, said higher volumes by all the divisions except sponge iron helped gross sales to climb up 11.7 per cent to Rs 4,022.59 crore in the fiscal 1997-98 as compared to Rs 3,602.08 crore recorded in the previous fiscal.

Net sales were Rs 3,499.84 crore as against Rs 3,088.92 crore recorded in the previous fiscal. Higher depreciation on account of the new viscose staple fibre plant pulled down net profit,officials said. Depreciation increased to Rs 167 crore as against Rs 147.54 crore in the same period of the previous year. Interest pay-out was marginally lower at Rs 258.94 crore last year against Rs 258.94 crore in the corresponding period of the previous fiscal. As a result of lower profits, Grasim8217;s EPS has fallen to Rs 31.92 against Rs 37.97 in the previous year.

The cement division was the worst hit due to the industrial recession with realisation during the year down to Rs 1,118 per tonne against Rs 1,325 per tonne in the 1996-97 fiscal. Production increased 14.8 per cent to 4.7 million tonne against 4.1 million tonne. The VSF division, despite a 12.2 per cent production increase suffered due to the south-east Asian crisis, with international prices plummeting almost 7.5 per cent.

While the production of the sponge iron division was 5.5 per cent lower due to a shutdown, domestic prices had dipped 8.2 per cent during the last fiscal, Jain said. He said performance of both divisions would be betterin the current fiscal with the commissioning of 30,000 tonne capacity at the VSF division and increase in hot-briquetted iron capacity.