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Cover Story
 

“We are now Focussing on Specialty Fibres’’
Adesh Gupta, Director & CFO, Grasim Industries, talks to Shephali Bhatt on what Worked and what didn’t for The Company Last Fiscal
Issue Date - 21/07/2011
 
B&E: Grasim Industries reported a 37% yoy growth in profit in Q4, FY2011. What factors drove the number home?
Adesh Gupta (AG): The strong cash flow (supported by buoyant demand conditions) from our VSF (Viscose Staple Fibre) business was a major growth driver. In fact, the business achieved 100% capacity utilisation during the quarter as prices were in line with competitive fibres. The cement business also contributed significantly to our topline. Better performance came in from both the RMC (ready mix concrete) and white cement division.

B&E: How much has the overall market for sectors, which Grasim Industries caters to, grown in the last fiscal?
AG: Cement has grown at 5.3% in FY2011. The growth has been subdued due to de-growth in key consuming states of Andhra Pradesh, Haryana and Delhi; and lower spending on reality and infrastructure and non availability of resources like railway wagons, construction material etc. But we are confident that these are aberrations and that growth will revert to the 9-10% in the long term, given the huge potential which exists in the housing as well as infrastructure sector. At the same time, volumes were maintained by the VSF business despite a shutdown at one of our plants. Grasim’s growth mirrors the industry growth since we are the only major player in India.

B&E: But when it comes to full year, Grasim Industries’ net profit after tax plummeted by 43.52% in FY2010. What were the reasons for this massive fall?
AG: The cement business has been facing oversupply issues, due to which in the early part of the year, particularly in Q2 FY2011, the cement realisation and profits had fallen to unrealistic levels. Even the VSF business went through market related challenges. The better profits in Q4 FY2011 have helped in nullifying the lower profits in the previos three quarters of the year.

B&E: So, are there any strategic innovations on the cards?
AG: Most certainly. In fact, improving logistics efficiency by creating a hub and spoke model (building split grinding units and bulk terminals) and owning our own rakes has been the focus in the cement business currently. Then we are also looking at innovations, both on the cost efficiency front as well as in the development of new products, especially on the RMC and Wall Care Putty side. VSF business is too focusing on specialty fibres. We have developed the technology and our new facility at Vilayat (in Gujarat) is gearing up to produce that specialty fibre. We have a strong R&D base in the VSF business, both at the product and product application level. Another thrust area for our businesses has been environment – with Waste Heat Recovery systems in cement and use of Genosorb technology in the VSF business.

 

Shephali Bhatt           

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