A chemist holds a water sample as she tests for the level of gas condensate present in the water treatment pipes. (Photographer: Simon Dawson/Bloomberg)

VSF, Caustic Soda Prices To Remain Stable, Says Grasim Industries’ Group CFO

Aditya Birla Group firm Grasim Industries Ltd., which has a near-monopoly in viscose staple fibre, expects demand to remain strong and prices to stay firm in this segment.

The company sees no imminent change in the demand for VSF products and therefore expects prices to remain largely stable over the next few quarters despite external factors, Sushil Agarwal, Group Chief Financial Officer at Grasim Industries told BloombergQuint.

There are external factors. China keeps influencing pricing. But in the Indian context, we don’t want to change our pricing very frequently for the local consumer. Although the international price benchmark will remain in the background, we don’t do it on a daily basis.
Sushil Agarwal, Group CFO, Grasim Industries

The demand for caustic soda in India is also expected to grow with rising consumption from the alumina and textile sectors, Agarwal said. Though the price of this key raw material skyrocketed globally because of a supply glut and capacity shutdowns, Grasim expects domestic prices to remain firm.

There is a strong demand in the domestic market. End-user industries like aluminium to soaps and detergents are seeing solid demand.
Sushil Agarwal, Group CFO, Grasim Industries

The company already has around 144 tonnes of capacity under implementation in the chemicals segment, which is expected to come through by end of this fiscal, Agarwal said. At 92 percent, Grasim’s capacity utilisation in this segment is ahead of industry average.

The company will spend Rs 2,855 crore on chemicals, VSF expansion and capital expenditure for the financial year 2017-18, Grasim said in an investor presentation. The planned capex will be funded through internal accruals, Agarwal added.

Grasim Industries’ net profit declined 38 percent to Rs 525 crore in the July-September quarter. Consolidated revenue, however, saw a 63 percent jump to Rs 13,645.6 crore from the corresponding period last year.

Operating performance across business lines has been good, the Agarwal added, with ebitda growing 41 percent to Rs 2,515.6 crore on a yearly basis. The margin, however, contracted 290 basis points in the same period.

Watch the full interview here.