Mumbai, May 5: Grasim Industries, the Aditya Birla group flagship, has posted a 16 per cent decline in net profit despite a 13.3 per cent growth in net sales for the 1997-98 fiscal. Lower realisation in most lines of business dragged down profit margins, Grasim officials said.Higher volumes by all the divisions except sponge iron increased net sales to Rs 3,499.84 crore against Rs 3,088.92 crore recorded last year. Higher depreciation on account of the new viscose staple fibre plant pulled down net profit to Rs 230.78 crore as compared with Rs 274.56 crore posted in 1996-97.
Depreciation provided increased to Rs 167 crore against Rs 147.54 crore in the same period of the previous year. Interest pay-out was marginally lower at Rs 255.67 crore this year against Rs 258.94 crore in the corresponding period of the previous fiscal.Other income was lower at Rs 123.82 crore against Rs 150.6 crore in the previous year. Provision for tax is higher at Rs 45 crore against Rs 41 crore in 1996-97.
The board ofdirectors of Grasim has recommended a dividend of Rs 6.75 per share. The company paid a dividend of Rs 6.50 per share in 1996-97. As a result of the dragged-down profits, Grasim's earnings per share (EPS) has fallen to Rs 31.92 against Rs 37.97 in the previous year.
Grasim Industries president Shailendra Jain said the cement division was the worst-hit due to the industrial recession with realisation during the year down 15.6 per cent to Rs 1,118 per tonne against Rs 1,325 per tonne in the 1996-97 fiscal. Production increased by 14.8 per cent to 4.7 million tonne against 4.1 million tonne.
The VSF division, despite a 12.2 per cent increase in production, suffered as a result of 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. Jain added that performance of both the divisions would be better in the currentfiscal with the commissioning of 30,000 tonne capacity at the VSF division, and increase in hot-briquetted iron capacity (HBI) by 150,000 tonne in the second and third quarters, respectively. The cement division has also acquired a mini-cement plant in south India, which will give the company access to the buoyant Tamil Nadu and Kerala markets.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
