Grasim Q4 dips 8% on falling fibre prices (India)

Grasim Industries, the flagship company of the Aditya Birla group, has reported an 8% fall in its fourth quarter net profit due to lower prices of fibre, which came down significantly from the previous fiscal's record levels, and higher costs.

The Mumbai-based company, which is the world's largest fibre maker and India's largest cement producer by capacity, said its net profit for the January-March, 2012 period fell to Rs 808.78 crore. Revenue for the quarter grew 12% to Rs 7,289.16 crore.

For the full year, however, Grasim's net profit grew 16% and revenue 17%. "The fibre business was impacted due to global conditions, while cement performed well due to improved demand," Grasim said in a statement.

Prices of Grasim's viscose staple fibre, which is one of the main raw materials for making garments, fell 16% in the year ended March, mainly due to higher capacities in China. This also led to a sharp decline in the operating profit margin of the fibre business, to 15.6% from 34.8% the previous year. "The weak price trend for fibres may not provide for the growth seen last year," said Murtuza Arsiwalla of Kotak Securities. "While volumes have offset the fall, the trend looks bleak."