Grasim, the diversified major in the Aditya Birla Group, has posted impressive results for the fourth quarter and full year ended 31st March 2004. While net sales have increased by 13% in FY04, excluding the extraordinary adjustments in both the years, net profit has risen by 40%.
This impressive numbers have come about on account robust growth in cement sales in 4QFY04 combined with significant improvement in operating margins. With the steel cycle also in favour of producers, both sales and realisations have increased significantly during 4QFY04.
The turnover growth in 4QFY04 is among the highest in FY04 at 22%. One key factor, which we believe has led to this robust growth is the recovery in cement prices. The growth is much higher compared to a 8% growth in sales in 3QFY04 on a YoY basis.
Though sales volumes for FY04 grew by 7% accompanied by a marginal rise in realisation, much of it has come about in the last quarter of the fiscal year. After growing by just 4% in 1HFY04, the cement sector grew at a faster rate of 7% in 2HFY04. This was accompanied by an estimated 5% to 7% improvement in price realisation. Grasim, being the market leader, has reaped the benefit of the same.