Adesh Gupta, Director & CFO, Grasim Industries, talks to Shephali Bhatt on what Worked and what didn’t for The Company Last Fiscal
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.
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.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
