Grasim 4Q net profit down; sees pressure on margins

Grasim 4Q net profit down; sees pressure on margins
Published: 20 May 2009

India’s Grasim Industries Ltd posted Tuesday a 42% decline in fiscal fourth-quarter unconsolidated net profit from a year earlier when it had a one-time gain.

Profit in the three months ended March 31 slid to INR3.85bn from INR6.67bn a year earlier, the cement maker said in a statement.

Revenue rose 6.1% to INR29.32bn from INR27.64bn a year earlier.

In the year-earlier quarter, Grasim took a gain of about INR2.37bn from the sale of a stake in unit Digvijay Cement Company Ltd. to  Cimpor.

"Cement demand has been very good which has been coming from the government spending prior to the elections and individual housing," Chief Financial Officer D. D. Rathi said. "Even this year, so far we have been witnessing good demand."

Grasim said its net profit was also hurt by higher payment toward interest and increased depreciation on several new projects.

Interest cost climbed 42% to INR384.7m, while depreciation cost increased 33% to INR1.25bn.

Grasim sold 4.82Mt of cement in the fourth quarter, 13% more than a year earlier. Sales for the fiscal year rose just 6% because the new manufacturing capacities became available only toward the end of the year.