India’s Grasim Industries Ltd Wednesday said fourth-quarter consolidated net profit rose 60.2%, boosted by higher cement prices that was driven by continued buoyant demand.
Taking advantage of the high demand for the commodity, Grasim said it will invest INR23.45bn during the next two years to expand cement capacity from 13.1Mt to 22.6Mt.
"We see robust cement growth and our strategy is to put cement capacity to meet this growth in demand," Grasim director D.D. Rathi said at a press conference.
Cement makers such as Grasim have benefited from recent massive spending on India’s creaky infrastructure, which needs investment of about $320bn over five years, according to government estimates.
India’s economy, which has grown at a rate of 8% and above for the past three years, has also created a boom in the industrial and housing sectors, boosting the profits of cement companies.
Consolidated net profit for the January-March quarter was INR5.59bn, up from INR3.49bn a year earlier. Standalone net profit for the quarter was INR4.74bn, up 80.2% from the year ago period.
Grasim, one of India’s major cement producers by capacity, and the flagship company of the Aditya Birla Group, said consolidated total revenue rose 39.8 per cent to INR41.85bn from INR29.93bn a year ago.
Its standalone total revenue increased 36.2% to INR25.71bn in the January-March quarter from INR18.87bn a year ago.
Net realisation for cement rose 35.2% to INR2,979 a ton in the quarter. Sales volume rose 1% to 3.92Mt from the previous corresponding quarter when sales volume totaled 3.87Mt.
Traditionally, cement prices rise in the third and fourth quarters, due to a spurt in construction activity after the monsoons retreat in August.
Net realization for viscose rose 15% on-year to INR88,687 a ton while sales volume was up 13% at 68,588 tons.
Grasim said the capital expenditure plans for its cement business included cost of modernisation, de-bottlenecking, establishing a grinding unit at its unit in the northern town of Dadri and setting up captive power plants.
It said it would also invest INR19 billion on capacity expansion and setting up captive power plants in a unit, Ultratech Cement Ltd. (532538.BY).