Grasim Industries Ltd. · NSE:GRASIM
Grasim Industries — FY2002 Earnings Presentation
50 slides from Grasim Industries's earnings presentation, May 2, 2002
Slide 1: Performance Review – FY2002
Grasim Industries Limited Performance Review – FY2002 2 May 2002
Slide 2: Financial Performance – FY02
Financial Performance –FY02 Rs. Crores FY02 FY01 % chg. Net Turnover & Operating Income 4,386.7 4,471.5 (2) Other Income 114.6 89.7 28 PBIDT 936.8 911.5 3 Interest and Finance Charges 190.3 238.8 (20) Gross Profit 746.5 672.7 11 Depreciation 251.7 251.9 - PBT(before Exceptional Items) 494.8 420.8 18
Slide 3: Financial Performance – FY02 (Contd..)
Financial Performance – FY02 (Contd..) Rs. Crores FY02 FY01 Exceptional Items Loss on sale of Investments/ Profit on transfer of Undertaking (18.1) 18.4 Excess provision for taxes for earlier years written back 68.1 Loss on closure of Mavoor units (RC and loss on asset retired) (74.3) Loss on sale o
Slide 4: Performance Highlights - FY02
Performance Highlights - FY02 z Excellent performance, viewed in the context of sluggish domestic and global economic slowdown ¾ Both key businesses, namely Cement and Fibre, performed well ¾ Overall company profitability registered good improvement despite weaker performance of other businesses z T
Slide 5: Performance Highlights - FY02
Performance Highlights - FY02 z Major Business Restructuring done in FY02 ¾ Stake in Software Business divested ¾ Closure of Mavoor Fibre and Pulp Plants ¾ Trading operations being discontinued ¾ Textile (Fabric) unit at Gwalior sold as a going concern z Exceptional charge of Rs.152 Crs. to current
Slide 6: Performance Highlights - FY02 (Contd..)
Performance Highlights - FY02 (Contd..) z Deferred Tax Adjustment ¾ Provision of Rs. 52 Crs. in FY02 made as per AS-22 ¾ Current year Deferred Tax takes into account revision in Corporate Tax rate proposed by Finance Bill 2002 Ö Increase in past charge due to change in rate of tax Rs.17 Crs., provid
Slide 7: Financial Performance – Q4FY02
Financial Performance – Q4FY02 Rs. Crores Q4FY02 Q4FY01 % Chg. FY01 Net Turnover & Operating Income 1,111.1 1,156.3 (4) 4,471.5 Other Income 58.8 38.1 54 89.7 PBIDT 262.8 278.6 (6) 911.5 Interest and Finance Charges 43.5 57.8 (25) 238.8 Gross Profit 219.3 220.8 (1) 672.7 Depreciation 63.7 63.3 1 251
Slide 8: Net Revenue Mix - FY02
Net Revenue Mix - FY02 Sponge Iron others Sponge Iron Others 7% 6% 9% 8% VSF 32% VSF 30% Cement Cement 40% 46% Chemical 5% Textiles Textiles Chemical 6% 5% 6% FY02 (Rs. 4,387 Crs.) FY01 (Rs.4,472 Crs.) 8
Slide 9: PBIDT Mix - FY02
PBIDT Mix - FY02 Sponge Iron Others Others 6% Sponge Iron Textiles 5% 3% Textiles 9% VSF -2% -3% 47% VSF 38% Cement 35% Cement 50% Chemical Chemical 3% 9% FY02 (Rs.937 Crs.) FY01 (Rs.912 Crs.) 9
Slide 10: Segmental Performance - FY02
Segmental Performance - FY02 Rs. Crores Revenue PBIT Capital ROAvCE Employed (%) Fibre 1,329 306 879 33 Chemical 220 11 228 5 Cement 2,075 339 2,055 17 Sponge Iron 332 12 570 2 Textile 276 (38) 133 (20) Others 271 - 35 - 10
Slide 11: Segmental Performance - Q4FY02
Segmental Performance - Q4FY02 Rs. Crores Revenue PBIT Capital ROAvCE Employed (%) Fibre 362 96 879 42 Chemical 57 (14) 228 (24) Cement 539 95 2,055 19 Sponge Iron 89 - 570 - Textile 58 (16) 133 (35) Others 40 3 35 11
Slide 12: Viscose Staple Fibre
Viscose Staple Fibre % % FY02 FY01 Chg. Q4FY02 Q4FY01 Chg. Capacity TPA 220,775 220,775 - 220,775 220,775 - Production MT 176,462 218,847 (19) 57,588 57,245 1 Sales Volumes MT 181,520 203,854 (11) 52,657 48,228 9 Net Turnover Rs.Crs. 1,329 1,473 (10) 362 370 (2) Avg. Realisation Rs./MT 68,511 69,733
Slide 13: Viscose Staple Fibre (Contd..)
Viscose Staple Fibre (Contd..) Highlights - FY2002 z VSF operations were affected by world wide recessionary conditions during early part of the year z Sequential growth continued after significant drop in volumes in Q1FY02. Q4FY02 volumes higher by 12% over Q3FY02 z Full year volumes still lower by
Slide 14: Viscose Staple Fibre (Contd..)
Viscose Staple Fibre (Contd..) Highlights (Contd..) z Operating margins down at 27% despite falling pulp prices and improved internal efficiencies ¾ Lower volumes ¾ Lower realisation ¾ Margins would have been better but for sharp rise in caustic prices and reduced economies of scale 14
Slide 15: Viscose Staple Fibre (Contd..)
Viscose Staple Fibre (Contd..) Outlook z Rising trend in exports/deemed exports and likely further improvement in domestic demand to lead to a normal growth of 4% in volumes z Reduction in inputs prices, improved plant efficiencies, improved economies of scale and closure of non-viable Mavoor Plant
Slide 16: Cement
Cement % % FY02 FY01 Q4FY02 Q4FY01 Chg. Chg. Grey Cement Capacity Mn. MT ** 11.36 9.86 5 ** 11.36 9.86 5 Production Mn. MT 9.53 9.10 5 2.48 2.28 8 Sales Volumes Mn. MT 9.68 9.16 6 2.51 2.36 7 Net Turnover Rs. Crs. 1,926 1,719 12 495 495 - Avg Realisation Rs./MT 1,917 1,846 4 1,861 2,131 (13) White C
Slide 17: Cement (Contd..)
Cement (Contd..) Highlights - FY2002 z Satisfactory performance for the full year z Sales volumes grew by 6%, against industry growth of 9% ¾ Continued strong performance in the North and the South, witnessed sales growth of 11% Ö Stabilised operations at Grasim-South Ö Commissioning of grinding uni
Slide 18: Cement (Contd..)
Cement (Contd..) Highlights - FY2002 (Contd..) z Operating margins increased from 17% to 23% in FY02 ¾ Benefits of improved pricing environment ¾ Reduction in fuel and energy costs z Strategic investments in L&T ¾ Grasim acquired 10.05% stake in L&T Ö 2.5 crore shares purchased from Reliance Ö Acqui
Slide 19: Cement (Contd..)
Cement (Contd..) Outlook z Market to double in size every 7-8 years at current GDP growth z Infrastructure and Housing sectors to support demand growth of 8% p.a. z Infrastructure sector to remain a thrust area ¾ Growing emphasis on roads, bridges and urban infrastructure ¾ Early completion of the G
Slide 20: Cement (Contd..)
Cement (Contd..) Outlook (Contd..) z Gujarat reconstruction activity to strengthen regional consumption z No significant green field capacities underway, demand-supply balance likely in next 3 years z Positive outlook for pricing ¾ Significant downside to prices unlikely ¾ Economic compulsions and r
Slide 21: Cement (Contd..)
Cement (Contd..) z Grasim will focus on ¾ Ensuring dominance in the identified core markets of North, South and Western corridors ¾ Increasing share in the profitable regions and growth segments ¾ Proactive change in product/market mix to ensure superior realisation ¾ Enhanced capital productivity a
Slide 22: Chemical
Chemical FY02 FY01 % Q4FY02 Q4FY01 % Chg. Chg. Capacity (Caustic) MT 160,600 160,600 160,000 160,600 Production (Caustic) MT 129,784 131,253 (1) 37,928 33,175 14 Sales Volume(Caustic) MT 129,051 133,450 (3) 37,968 34,031 12 Net Turnover Rs. Crs. 219 236 (7) 58 60 (4) Avg. ECU Realisation Rs./MT 14,5
Slide 23: Chemical (Contd..)
Chemical (Contd..) Highlights - FY2002 z Mixed Q4 performance ¾ Improved demand for chlorine necessitated higher production. Caustic volumes thus grew by 12% YoY in Q4FY02 ¾ ECU realisation under pressure, dragged operating margins substantially ¾ Higher Electricity duty/Cess imposed by the State Go
Slide 24: Chemical (Contd..)
Chemical (Contd..) Outlook z Caustic Soda demand expected to remain stable at current level z ECU realisation to remain stable at current levels ¾ Caustic realisation under pressure in line with international prices ¾ Hcl and Chlorine prices firming up due to improved demand z Operations to be at re
Slide 25: Textiles
Textiles % % FY02 FY01 Q4FY02 Q4FY01 Chg. Chg. Divisional Turnover Rs.Crs. 268 265 1 57 56 2 PBIDT Margin* % (8) (9) - (21) (19) - PBIT * Rs. Crs. (38) (41) (8) (16) (16) - Capital Employed Rs. Crs. 133 235 (43) 133 235 (43) ROAvCE % (20) (17) (35) (25) * Before Employees Separation Cost Highlights
Slide 26: Textiles (Contd..)
Textiles (Contd..) ¾ Gwalior unit has been a key drag on business performance Ö Gwalior unit lost Rs.27 crores at PBIDT level, against operating profit of other units at Rs.7 crores Ö Pressure was expected to continue with rising wage bill and inefficient operations ¾ Gwalior unit sold as a going co
Slide 27: Sponge Iron
Sponge Iron % % FY02 FY01 Q4FY02 Q4FY01 Chg. Chg. Capacity TPA 900,000 900,000 - 900,000 900,000 - Production MT 559,567 663,998 (16) 128,628 154,281 (17) Sales Volumes MT 562,334 673,852 (17) 156,999 164,081 (4) Net Turnover Rs. Crs. 332 401 (17) 89 98 (9) Avg Realisation Rs./MT 5,606 5,733 (2) 5,2
Slide 28: Sponge Iron (Contd..)
Sponge Iron (Contd..) Highlights - FY2002 z Full year performance remained under pressure ¾ Continued restricted Natural Gas Supplies from GAIL dragged plant utilisation from 74% to 62% ¾ Usage of Naptha not viable due to prohibitive cost z Sales volumes down by 17% ¾ Lower production due to poor av
Slide 29: Sponge Iron (Contd..)
Sponge Iron (Contd..) Outlook z Natural gas availability and prices continues to be main area of concern going forward z Demand outlook positive with steel sector showing early signs of recovery z Rising global scrap prices and upwards revision of customs duty on scrap likely to support domestic pri
Slide 30: Capex Plan
Capex Plan Rs. Crores Capex Total Completion Amt FY03 FY04 Schedule A New Projects : - Cement Capacity Expansion - Debottlenecking/Blending 78 67 11 Q2 FY03 - Power Plants (Cement units) - Rajasthan 23 MW 71 71 Dec. - 02 - Tamil Nadu 12.5 MW 39 25 13 Feb. - 03 - Fibre Application Development and 52
Slide 31: Capex Plan (Contd..)
Capex Plan (Contd..) Rs. Crores Total Capex Amt FY03 FY04 B Modernisation : - VSF 52 46 6 - Cement 156 122 33 - Chemical 18 18 - - Textile 9 9 - - Other units 5 5 - C Other Capex 52 40 12 Total (A + B + C) 531 427 92 z FY 02 Capex - Rs.260 Crores ¾Cement 211 ¾Fibre 31 ¾Textile 7 ¾Others 11 31
Slide 32: Profitability & Financial Snapshot
Profitability & Financial Snapshot
Slide 33: Profitability Snapshot
Profitability Snapshot FY99 FY00 FY01 FY02 Gross Turnover Rs. Crs. 3,897 4,646 5,184 5,070 Net Turnover Rs. Crs. 3,354 3,962 4,453 4,372 PBIDT Rs. Crs. 678 756 912 937 PBIDT Margin % 20.2 19.0 20.5 21.4 PBDT Rs. Crs. 386 500 673 747 PAT (before deferred tax) Rs. Crs. 168 251 371 438 PAT Margin % 5.0
Slide 34: Financial Snapshot
Financial Snapshot FY99 FY00 FY01 FY02 Gross Block Rs.Crs. 4,937 5,206 5,312 5,371 Net Block Rs.Crs. 3,354 3,401 3,303 3,263 Equity Rs.Crs. 91.7 91.7 91.7 91.7 Net Worth Rs.Crs. 2,616 2,777 3,075 2,707 Net Worth + Deferred Tax Rs.Crs. 2,616 2,777 3,075 3,347 Avg.Capital Employed Rs.Crs. 4,572 4,759
Slide 35: Focus And Strategy
Focus And Strategy z Focus ¾ Deliver enhanced value to shareholders on a sustained basis ¾ Value creation and not asset creation alone z Strategy ¾ Focus on core businesses – VSF and Cement ¾ No unrelated diversification / Investments ¾ Improve asset utilisation through market expansion and better p
Slide 36: Subsidiary Company and Grasim’s Consolidated Financial Statement (CFS)
Subsidiary Company and Grasim’s Consolidated Financial Statement (CFS) 36
Slide 37: Subsidiary Company – Shree Digvijay Cement FY02
Subsidiary Company – Shree Digvijay Cement FY02 z Financial Performance Rs. Crores Jan to Mar.02 Jan to April 01 to Year ended (Quarter) Mar.01 March 02 Sept.01 (12 Months) (Audited) Capacity MT 10,75,000 10,75,000 10,75,000 10,75,000 Production MT 2,35,958 171405 7,35,434 6,40,822 Turnover volume M
Slide 38: Subsidiary Company - Shree Digvijay Cement Co.
Subsidiary Company - Shree Digvijay Cement Co. z Operating Margin 8.6% z Return on Capital Employed ¾ PBIDT/CE 11.5% ¾ PBIT/CE 5.3% z Higher Net Loss attributable to very high interest burden, due to higher debts and high interest rates z Revival Package being worked out with Lenders and State Gover
Slide 39: Grasim – Consolidated Financial - FY02
Grasim – Consolidated Financial - FY02 Profitability Rs. Crs. GRASIM GRASIM CFS Variation Net Turnover & other Income 4,386.7 4,540.7 154.0 PBIDT 936.8 948.5 11.7 Interest 190.3 217.5 27.2 Depreciation 251.7 260.3 8.6 PBT (before Exception Items & Taxes) 494.8 470.7 (24.1) Profit after current taxes
Slide 40: Plant Locations
Plant Locations Bhatinda(G) Noida Gurgaon T Bhiwani 7 Jodhpur Shambhupura Jawad 7 T Bharuch Malanpur F F C Nagda F Fibre plants Raipur P Pulp plant Raigarh C S Hotgi(G) Chemical plant Hyderabad T Textiles units Malkhed Grey cement plants / Grinding Units (G) White cement plant Bangalore Harihar B Ch
Slide 41: Production (MT)
Production (MT) FY02 FY01 Q4FY02 Q4FY01 Capacity Capacity Capacity Capacity Production % Production % Production % Production % TPA TPA TPA TPA VSF 2,20,775 1,76,462 80 220,775 218,847 99 2,20,775 57,588 104 2,20,775 57,245 104 Pulp 70,000 71,251 102 58,000 69,729 120 70,000 15,948 91 58,000 14,643
Slide 42: Turnover – Qty & Realisation
Turnover – Qty & Realisation Quantity (MT) Realisation (Rs. /MT) Product Q4 Q4 Q4 Q4 FY02 FY01 FY02 FY01 FY02 FY01 FY02 FY01 VSF 181,520 203,854 52,657 48,228 68,511 69,733 65,416 73,751 Pulp 71,396 70,148 16,123 15,316 22,327 22,487 20,500 22,500 Caustic Soda * 129,050 133,450 37,968 34,031 14,564
Slide 43: Thank You
GRAS TM ADITYA BIRLA GROUP Thank You
Slide 44: Press Release: Grasim reports excellent performance for FY 2002
Press Release Mumbai, 2nd May, 2002 GRASIM, the ADITYA BIRLA GROUP's FLAGSHIP COMPANY REPORTS EXCELLENT PERFORMANCE FOR FY 2002 Profit after Current Tax for FY 2002 : Rs. 438 Crores, up by 18% (Rs. Crores) Financial Financial Variation Year ended Year ended (%) 31.03.2002 31.03.2001 (Audited) (Audit
Slide 45: Press release: economic slowdown and Q4 FY02 performance
The economic slowdown has constrained the working of the Company’s Chemical, Textiles and Sponge Iron businesses during the year under review. This was offset by the enhanced performance of the Cement business. To rationalize its manpower, the Company has offered a VRS. A total of 1004 persons have
Slide 46: Press release: tax write-back, dividend and production tables
The Company has written back the excess provision for taxation no longer required, amounting to Rs.68 Crores. As these items are exceptional and non-recurring in nature, these have been indicated separately below the line, so that the result for the current period and corresponding period is compara
Slide 47: Cement Business
Cement Business The Cement business has bettered its performance. Production at 9.53 Mn. MT and sales volumes at 9.68 Mn. MT are up by 5% and 6% respectively, over the previous year. Capacity utilisation in the cement plants during the year stood at 92%. During the year, the Company has commissioned
Slide 48: Chemical Business and Textile Business
Chemical Business The Chemical business has been affected by the steep fall in international prices of caustic soda and ancillary products along with rising power costs largely due to the levy of Energy Development Cess on captive generation. Production and sales volumes, therefore, have been slight
Slide 49: Audited Financial Results for the Year Ended 31st March 2002
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED ON 31st MARCH , 2002 Rs in crores Three Months Three Months Year ended Year ended Ended 31st Ended 31st 31st March 2002 31st March 2001 March 2002 March 2001 ( Audited ) ( Audited ) Net Sales / Income from Operations 1,111.10 1,156.32 4,386.64 4,471.48 Ot
Slide 50: Segments Reporting
Cont. from Page 1 7 Segments Reporting: Rs. in Crores Three Months Year ended Ended 31st 31st March 2002 March 2002 ( Audited ) 1. SEGMENT REVENUE a Fibre & Pulp 361.59 1,328.83 b Chemicals 57.13 219.93 c Cement 538.80 2,074.85 d Sponge Iron 89.19 331.66 e Textiles 58.13 276.12 f Others 39.94 270.68