MIRA INFORM REPORT

 

 

Report Date :

05.01.2008

 

IDENTIFICATION DETAILS

 

Name :

GRASIM INDUSTRIES LIMITED

 

 

Formerly Known As :

GWALIOR RAYON SILK (WEAVING) COMPANY LIMITED

 

 

Registered Office :

P. O. Birlagram, Nagda – 456 331, Madhya Pradesh

 

 

Country :

India

 

 

Financials (as on) :

31.03.2007

 

 

Date of Incorporation :

25.08.1947

 

 

Com. Reg. No.:

10-410

 

 

CIN No.:

[Company Identification No.]

L17124MP1947PLC000410

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

BPLG00117F

 

 

Legal Form :

Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.

 

 

Line of Business :

Manufacturing and selling of complete range of plant and machinery for viscose staple fibre, viscose fibre yarn, rayon grade pulp and paper, Sulphuric acid, alum, olieum, carbon-bi-sulphide, caustic soda, chlorine, hydrochloric acid, stable bleaching powder, water treatment plant, chloro-sulphuric acid, mini cement plant on turnkey basis, sodium Sulphate, chlorine derivatives, electrostatic precipitator, baling press and evaporation system.

 

RATING & COMMENTS

 

MIRA’s Rating :

Aa

 

 

 

RATING

STATUS

PROPOSED CREDIT LINE

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

Large

 

Maximum Credit Limit :

USD 240000000

 

 

Status :

Excellent

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well established and reputed company of Birla Group.  Directors are reported as experienced, respectable and resourceful industrialists.  Their trade relations are reported as fair. General financial position of the company is satisfactory. Payments are usually correct and as per commitments.

 

The company can be considered good for normal business dealings at usual trade terms and conditions.

 

 

LOCATIONS

 

Registered Office :

P. O. Birlagram, Nagda – 456 331, Madhya Pradesh, India

Tel. No.:

91-7366-246760/62/64/66

Fax No.:

91-7366-244114/246024

E-Mail :

grsmsfd@vsnl.com

shares@grasim.com

sfdiv.grasimbm@gems.vsnl.net.in

info@grasim.com

Website :

http://www.grasim.com, http://www.adityabirla.com

 

 

Corporate Office :

91, Sakhar Bhavan, 230, Nariman Point, Mumbai – 400 021, Maharashtra

Tel. No.:

91-22-22819520

Fax No.:

91-22-22284629

 

 

Office:

Taple Fiber Division, Century Bhavan, 3rd Floor, Dr. A B Road, Worli, Mumbai – 400030

Tel. No.:

91-22-24210182-86

Fax No.:

91-22-24220892

 

 

Factory 1 :

FIBRE, PULP and CHEMICAL PLANTS

 

Staple Fibre Division

Birlagram, Nagda – 456 331, Madhya Pradesh

Tel. No. 91-7366-246760-246766

Fax No. 91-7366-244114/246024

 

Harihar Polyfibres and Grasilene Division

Harihar, District Haveri, Kumarapatnam – 581 123, Karnataka

Tel. No. 91-8373-232637-39

Fax No. 91-8373-232465/232875

 

Birla Cellulosic

Birladham, Kharach, Kosamba 394 120, District Bharuch, Gujarat

Tel. No. 91-2629-270001/5

Fax No. 91-2629-270010/270310

 

Chemical Division

Birlagram 456 331

Nagda, Madhya Pradesh

Tel No. : 91-7366 245501 - 03

Fax No. : 91-7366 246767 / 245845

 

Pulp and Fibre Divisions

Birlakootam, Kozhikode, Mavoor – 673 661, Kerala

Tel. No. 91-495-2483161-3

Fax No. 91-495-2483116

 

CEMENT PLANTS

 

Vikram Cement

District Neemuch, Khor – 458 470, Madhya Pradesh

Tel. No. 91-7420-230514/230614

Fax No. 91-7420-235524

 

Aditya Cement

Adityapuram Sawa – Shambhupura, District Chittorgarh, Rajasthan – 312 613

Tel. No. 91-1472-22201972/97

Fax No. 91-1472-2220289

 

Grasim Cement

Grasim Vihar, Village P. O. Rawan, Tehsil  Sigma, District Raipur, Madhya Pradesh

Tel. No. 91-7726-288217/20

Fax No. 91-7726-288215/288209

 

Rajashree Cement

Aditya Nagar, Malkhed Road, Gulbarga – 582 292, Karnataka

Tel. No. 91-8441-2687221-24

Fax No. 91-8441-2687225

 

Grasim Cement Division – South

Reddipalayam P.O. : Ariyalur, District Perambalur – 621 704, Tamilnadu

Tel. No. 91-4329-249240

Fax No. 91-4329-249253

 

Birla White

Rajashree Nagar, Bhopalgarh, District Jodhpur, Kharia Khangar – 342 606, Rajasthan

Tel. No. 91-2920-26040/89

Fax No. 91-2920-264225

                 

Other Plants

 

Bhiwani Textile Mills/ Elegant Spinners

Birla Colony, Bhiwani – 125 021, Haryana

Tel. No. 91-1664-242577 / 243126

Fax No. 91-1664-243717 / 242575

 

Sponge Iron Division

Vikram Ispat, Salav, District Raigad – 402 202, Maharashtra

Tel. No. 91-2141-260110 / 260119

Fax No. 91-2141-260104 / 260122

 

Vikram Woolens

GH I to IV, Ghironghi, Malanpur, District Bhind - 477 117, Madhya Pradesh

Tel. No. 91-7539-283602 / 283606

Fax No. 91-7539-283339

 

 

DIRECTORS

 

Name :

Mr. Kumar Mangalam Birla

Designation :

Chairman

 

 

Name :

Mrs. Rajashree Birla

Designation :

Director

 

 

Name :

Mr. M. L. Apte

Designation :

Director

 

 

Name :

Mr. B. V. Bhargava

Designation :

Director

 

 

Name :

Mr. R. C. Bhargava

Designation :

Director

 

 

Name :

Mr. Y. P. Gupta

Designation :

Director

 

 

Name :

Mr. S. B. Mathur

Designation :

Director

 

 

Name :

Mr. Cyril Shroff

Designation :

Director

 

 

Name :

Mr. S. G. Subrahmanyan

Designation :

Director

 

 

Name :

Mr. D. D. Rathi

Designation :

Director

 

 

Name :

Mr Shailendra K. Jain

Designation :

Whole Time Director

 

 

KEY EXECUTIVES

 

Name :

Mr. Ashok Malu

Designation :

Company Secretary

 

 

Management

 

Staple Fibre and Pulp

Divisions:-

 

Mr. Shailendra K. Jain

Business Director

Mr. S. S. Maru

Senior Executive President, Pulp and Grasilene Divisions, Harihar

Mr. Thomas Varghese

Executive President (Marketing)

Mr. Vijay Kaul

Senior Executive President, Birla Cellulosic Division, Kharach

Mr. S. V. Kulkarni

Executive President, Birla Cellulosic Division, Kharach

 

 

Cement Divisions:-

 

Mr. Saurabh Mishra

Business Head

Mr. O. P. Puranmalka

Group Executive President and Chief Marketing Officer

Mr. S. K. Maheshwari

Senior Executive President and Chief Manufacturing Officer

Mr. L. N. Rawat

Senior Executive President – Rajshree Cement 

Mr. R. M. Gupta

Senior Executive President, Grasim Cement

Mr. D. R. Dhariwal

President, Birla White Cement

Mr. H. N. Singh

Executive President

Mr. D. P. Somani

Executive President, Vikram Cement and Aditya Cement

 

 

Chemical Division:-

 

Mr. G. K. Tulsian

Executive President

Mr. Sunil Kulwal

Executive President

 

 

Textile Divisions:-

 

Mr. Vikram D. Rao

Group Executive President (Textiles)

Mr. S. Krishnamoorthy

Chief Operating Officer

 

 

Corporate Finance Division

 

Mr. D.D. Rathi

Whole Time Director and CFO

Mr. Sanjeev Bafha

Dy. Chief Financial Officer

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

Names of Shareholders

No. of Shares

Percentage of Holding

Individuals

133372

0.15

Bodies Corporate

22955788

25.04

Institutions

 

 

Mutual Funds /AXIS

7924604

8.64

Financial Institutions/Banks

261742

0.29

Insurance Companies

10215676

11.14

Foreign Institutional Investors

21389929

22.33

Non Institutions

 

 

Bodies Corporate

3390301

3.70

Individuals

 

 

[i] individual shareholders holding nominal share capital upto Rs. 0.100 Millions

10514364

11.47

[ii] Individual shareholders holding nominal share capital in excess of Rs. 0.100 Millions

1304076

1.42

Any other – Overseas Body Corporate

2623063

2.86

Any Other – Non Resident Indian [NRIs]

885240

1.97

Shares held by custodians and against which depository receipts have been issued

10075679

10.99

Total

91673834

100.00

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturing and selling of complete range of plant and machinery for viscose staple fibre, viscose fibre yarn, rayon grade pulp and paper, Sulphuric acid, alum, olieum, carbon-bi-sulphide, caustic soda, chlorine, hydrochloric acid, stable bleaching powder, water treatment plant, chloro-sulphuric acid, mini cement plant on turnkey basis, sodium Sulphate, chlorine derivatives, electrostatic precipitator, baling press and evaporation system.

 

 

Products:

Item Code No.

Product Description

550410-00

Staple Fibre

252329-01

Grey Portland Cement

720310-00

Sponge Iron

 

PRODUCTION STATUS

 

Particulars

Unit

Licensed Capacity

Installed Capacity

Actual Production

1. Viscose Staple Fibre/Polynosic HWM/Hi-Performance/Speciality Fibre

Tonnes

 

 

 

·         At Nagda, Mavoor, Harihar and

Kharach

 

325750

270100

246833

2. Sulphuric Acid (Captive and Intermediate Product)

Tonnes

 

 

 

·         At Nagda, Mavoor, Harihar and

Kharach

 

298070

191750

213442

3. Carbon-di-Sulphide (Captive and Intermediate Products)

Tonnes

 

 

 

·         At Nagda, Mavoor, Harihar and

     Kharach

 

67615

42915

45179

4. Rayon Grade Pulp (At Mavoor and Harihar)

Tonnes

72000

70000

73231

5. Rayon Grade Caustic Soda

Tonnes

258000

258000

136685

6. Stable Beaching Powder

Tonnes

45000

15000

20855

7. Man-Made Fibre Fabrics (At Gwalior and Bhiwani)

Mtr.

(in 000’s)

600 Looms

146 Looms

15179

8. Man-Made Fibre Yarn (At Bhiwani and Malapur)

KG.

(in 000’S)

117500 Spindles

44064 Spindles

8211

9. Cement

(At Jawad, Raipur, Shambhupura, Malkhed and Reddipalayam)

Tonnes

18354356

13115290

14417941

·         White Cement

       (At Khariakhangar)

Tonnes

475000

475000

364649

11. Industrial Machinery

Tonnes

25000

15950

##

12. Poly Aluminium Chloride

Tonnes

66000

36000

25621

13. Chloro Sulphonic Acid

Tonnes

49500

16500

14756

14. Sponge Iron

Tonnes

90000

90000

525183

 

 

GENERAL INFORMATION

 

Suppliers:

v      G K Electrical Services

v      Harihar Industries

v      Steive Engineering

v      Unity Enterprises

v      G K Enterprises

v      HY-TTUF Steels Private Limited

 

 

No. of Employees :

16648

 

 

Bankers :

v      State Bank of India, Bahrain

v      EXIM Bank, USA

v      Hongkong Bank, London

v      IDBI

v      ICICI

v      Mashreq Bank, Dubai

v      Standard Chartered Grindlays Bank, Dubai

v      British Bank of Middle East, Dubai

 

 

 

Facilities :

Secured Loans:

 

Particulars

As on 31.03.2007

Rs. in Millions

Non-Convertible Debentures [Note 1]

5016.900

Loans and advances from Banks:

 

-Working Capital Borrowings from Banks secured by hypothecation of stocks and book debts of the Company

2465.100

-Documentary Bills discounted against Demand/ Usance Bills under Letter of Credit

846.900

-Rupee Term Loans [Note 2 (a)]

1439.000

-Foreign Currency Loans [Note 3]

12706.600

Other Loans:

 

Rupee Term Loan [Note 2 (b)]

383.000

Deferred Sales Tax Loans secured by first available charge on the assets of Cement Units I & II at Jawad [Subject to the charge of the Non-convertible Debentures and Loans referred in Note 1& 3 (a) below}

 

 

Notes:

                        

1. Non –Convertible Debentures

 

A. Following Non-Convertible Debentures are secured by first pari passu charge on the Fixed assets, both present and future, of the specified divisions.

 

a)    13.25%- XXII Series Non-Convertible Debentures (redeemed at par in three equal annual installments commenced from 31.03.2005) were secured on a plot of land situated in Maharashtra and on the fixed assets f the divisions as mentioned in Note 4 below.

0.000

b)       12.60% - XXIII Series Non-Convertible Debentures (redeemable at par in three annual installments of 33%, 33% and 34% respectively of the face value of the debentures, commenced from 17.08.2005) are secured on a plot of land situated in Maharashtra and on the fixed assets of the divisions as mentioned in Note 4 below.

 

266.900

c)       i) 10.10% - XXVIII Series Non-Convertible Debentures (redeemed at par on 01.06.2006); and

0.000

ii) 9.70% - XXIX Series Non-Convertible Debentures (redeemed at par on 03.07.2006) were secured on the fixed assets of Sponge Iron Division at Salav.

 

0.000

d)       8.85% - XXX Series Non-Convertible Debentures (redeemed at par on 04.12.2006) were secured on a plot of land situated in Maharashtra and on the fixed assets of Chemical Division at Nagda and Grasim Cement Division at Raipur.

 

0.000

e)       I) 8.35% - XXXI Series Non-Convertible Debentures (redeemable at par on 05.07.2009, with put and call option on 05.07.2007)

600.000

ii) 8.20%-XXXII Series Non-Convertible Debentures (redeemable at par on 20.07.2009, with put and call option on 20.07.2007)

400.000

iii) Floating Rate (14% minus CMT1 per annum)- XXXIII Series Non-Convertible Debentures (redeemable at par on 13.08.2007)

500.000

iv) 7.55% - XXXIV Series Non-Convertible Debentures (redeemable at par on 20.08.2007) and

250.000

v) 6.75% - XXXV Series Non-Convertible Debentures (redeemable at par 09.11.2009, with put and call option on 09.11.2007)

1000.000

vi) 6.08% - XXXVI Series Non-Convertible Debentures (redeemable at par on 11.01.2010, with put and call option on 11.01.2008) are secured on the fixed assets of the divisions as mentioned in Note 4 below.

1000.000

B. MIBOR Linked NCDs (Redeemable at par on 12.06.2007 with daily put and call option)

1000.000

2 a) Rupee Term Loans from Banks are secured by exclusive charge on certain fixed assets of

 

i) Fibre Divisions at Nagda, Harihar and Kharach

187.000

ii) Fibre/ Pulp Divisions at Nagda and Harihar

1252.000

 

 

b) Other Rupee Term Loan is secured by first charge on the movable fixed assets, both present and future, of Textile Divisions at Bhiwani and Malanpur and proposed to be further secured on the immovable fixed assets, both present and future, of the said divisions.

383.000

3. a) Foreign Currency Loans are secured by first pari passu charge on the fixed assets, both present and future, of the divisions as mentioned in Note 4 Below:

4545.400

    b)  Foreign Currency Loans to be secured by first pari passu charge on the fixed assets, both present and future, of one or more divisions of the Company

8161.200

4. The Non Convertible Debentures mentioned in Note 1A-a), b) and e) above and Foreign Currency loans mentioned in Note 3 a) above are secured on the fixed assets, both present and future of Grasim Cement Division at Raipur, Chemical Division at Nagda, Cement Division-South at Reddipalayam, Aditya Cement Division at Shambhupura, Vikram Cement Division at Jawad, Rajshree Cement Divisions at Malkhed, White Cement Division at Kharia Khangar, Birla Super Cement Division at Hotgi, Birla Plus Cement division at Bathinda, Birla Super Bulk Terminal Division at Doddalballapur, Vikram Ispat Division at Salav, Fibre and Pulp Divisions at Kharach (excluding certain specific fixed assets of fibre/ Pulp Divisions at Nagda, Harihar and Kharach which are exclusively charged for the loans mentioned in Note 2 a) above).

 

 

Unsecured Loans:

Particulars

As on 31.03.2007

Rs. in Millions

From Banks:

 

-Buyer’s Import Credit

735.400

-Documentary Bills Discounted Against usance bills

19.700

Other Loans and Advances:

 

-From Banks:

 

-Foreign Currency Loans

1845.800

-From Others:

 

-Deferred Sales Tax Loan

4004.700

Total

6605.600

 

 

 

 

 

Banking Relations :

Good

 

 

Auditors :

 

Name :

G. P. Kapadia and Company

Chartered Accountants

Address :

Mumbai, Maharashtra

 

 

Membership:

v      Confederation of Indian Industry

 

 

Associates:

v      Aditya Birla Science and Technology Company Limited, became associate w.e.f. 28th March, 2006

 

 

Subsidiaries

v      Sun God Trading and Investment Limited

v      Samruddhi Swastik Trading and Investment Limited

v      Shree Digvijay Cement Company Limited

v      UltraTech Cement Limited

v      Narmada Cement Company Limited

v      Dakshin Cement Limited

v      UltraTech Ceylinco (Private) Limited

v      Harish Cement Limited

 

 

Joint Venture :

v      Birla Tata AT and T Limited

v      Idea Cellular Limited

v      AV Cell Inc, Canada

v      TANFAC Industries Limited, (ceased to be a joint venture w.e.f. 3rd February, 2006)

v      A V Nackawic Inc., Canada, (became a joint venture w.e.f. 4th  October, 2005)

v      Birla Jingwei Fibres Company Limited (became a joint venture w.e.f. 25.09.2006)

v      Birla Lao Pulp and Plantation Company Limited (became joint venture w.e.f. 30.06.2006

 

 

CAPITAL STRUCTURE

 

Authorized Capital:

No. of Shares

Type

Value

Amount

95,000,000

Equity Shares

Rs. 10/- each

Rs. 950.000 millions

 

Redeemable Cumulative Preference Shares

Rs. 100/- each

 

150,000

15%    “A” Series

 

Rs. 15.000 millions

100,000

8.57% “B” Series

 

Rs. 10.000 millions

300,000

9.30% “C” Series

 

Rs. 30.000 millions

 

TOTAL

 

Rs. 1005.000 millions

 

Issued, Subscribed & Paid-up Capital:

No. of Shares

Type

Value

Amount

91673854

Equity Shares

(Of the above, 29532500 Equity Shares were issued as fully paid up Bonus Shares by way of Capitalization of Share Premium and Reserves and 19359864 Equity Shares of Rs. 10.00 each issued as fully paid up for acquiring the cement business pursuant to Scheme of Arrangement without payment being received in cash

Rs. 10/- each

Rs. 916.700 millions

 

 

 

 

 

Share Capital Suspense:

 

 

15651

Equity Shares to be issued as fully paid up pursuant to acquiring of cement business of Aditya Birla Nuvo Limited under Scheme of Arrangement without payment being received in cash

Rs. 10/- each

Rs. 0.200

 

Total

 

Rs. 916.900 millions

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2007

31.03.2006

31.03.2005

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

916.900

916.900

916.900

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

61383.500

48903.900

42366.600

4] (Accumulated Losses)

0.000

0.000

0.000
NETWORTH

62300.400

49820.800

43283.500
 

 

 

 

LOAN FUNDS

 

 

 

1] Secured Loans

22910.000

13310.800

14725.500

2] Unsecured Loans

6605.600

5862.700

5357.900

3] Docu. Bills Disc. With Banks

0.000

623.200

0.000
TOTAL BORROWING

29515.600

19796.700

20083.400

DEFERRED TAX LIABILITIES

5825.500

5843.800

0.000
 

 

 

 
TOTAL

97641.500

75461.300

63366.900
 

 

 

 
APPLICATION OF FUNDS

 

 

 
 

 

 

 
FIXED ASSETS [Net Block]

33904.400

30046.300

30626.000
Capital work-in-progress

11923.500

2936.400

1459.400
 

 

 

 
INVESTMENT

42747.000

34817.100

29820.200
FIXED ASSETS HELD FOR DISPOSAL

143.300

127.600

0.000
 

 

 

 
CURRENT ASSETS, LOANS & ADVANCES

 

 

 
 
Inventories
8241.400
7507.300
6785.900
 
Sundry Debtors
5764.800
4134.500
5220.100
 
Cash & Bank Balances
1163.800
1555.800
867.000
 
Loans & Advances
8246.900
7055.400
6164.800
 
Interest accrued on Investment
7.000
14.600
0.000
Total Current Assets
23423.900
20267.600
19037.800
Less : CURRENT LIABILITIES & PROVISIONS
 
 

 
 
Current Liabilities
12668.600
9691.500
14772.400
 
Provisions
1832.000
3042.200
2804.100
Total Current Liabilities
14500.600
12733.700
17576.500
Net Current Assets
8923.300
7533.900
1461.300
 

 

 

 
MISCELLANEOUS EXPENSES

0.000

0.000

0.000
 

 

 

 
TOTAL

97641.500

75461.300

63366.900

 

 

PROFIT & LOSS ACCOUNT

 

PARTICULARS

 

31.03.2007

31.03.2006

31.03.2005
Sales Turnover

86035.900

66526.100

75464.600
Other Income

2653.200

1764.600

0.000
Total Income

88689.100

68290.700

75464.600
 

 

 

 
Profit/ (Loss) Before Tax

22263.600

12060.300

13037.100
Provision for Taxation

6905.500

3428.200

4180.000
Profit/ (Loss) After Tax

15358.100

8632.100

8857.100
 

 

 

 
Earnings in Foreign Currency:

 

 

NA

 

Export of Goods-On FOB basis

2729.000

1941.500

NA
 
Technical Know-how and Service charges
4.400

3.600

NA
 
Interest and Dividend
72.700

56.800

NA
 
Others
0.700

1.100

NA

Total Earnings

2806.800

2003.000

NA

 

 

 

 
Expenditures:

 

 

 
 
Raw Materials Consumed
22193.200

18226.900

 
Manufacturing Expenses
17443.300

15803.400

 
 
Purchases of Finished goods and Other Products
3211.600

2401.500

 
 
Payment to and Provisions for Employees
4594.000

4076.400

 
 
Selling, Distribution, Administration and Other Expenses
15056.900

11813.300

55142.100
 
Interest
1118.400

1033.800

 
 
Depreciation
3179.100

2916.400

 
 
Surplus on pre-payment of sales tax loan
0.000

(41.300)

 
 
Write back of provision for diminution
(371.000)

0.000

 
 

66425.500

56230.400

55142.100

 

 

QUARTERLY RESULTS

 

PARTICULARS

 

 

30.06.2007

30.09.2007

Type

 

1st Quarter

2nd Quarter

Sales Turnover

 

2,4447.900

2,5192.300

Other Income

 

677.400

573.200

Total Income

 

2,5125.300

2,5765.500

Total Expenditure

 

1,6526.600

1,7142.200

Operating Profit

 

8598.700

8623.300

Interest

 

284.700

272.200

Gross Profit

 

8314.000

8351.100

Depreciation

 

850.000

875.300

Tax

 

2057.000

2237.300

Reported PAT

 

5116.600

4997.800

 

 

KEY RATIOS

 

PARTICULARS

 

31.03.2007

31.03.2006

31.03.2005

Debt Equity Ratio

0.44

0.43

0.51

Long Term Debt Equity Ratio

0.37

0.36

0.43

Current Ratio

0.94

0.93

0.86

TURNOVER RATIOS

 

 

 

Fixed Assets

1.49

1.26

1.24

Inventory

12.20

10.64

12.66

Debtors

19.41

16.26

14.31

Interest Cover Ratio

20.91

13.39

10.40

Operating Profit Margin (%)

27.65

20.97

23.98

Profit Before Interest and Tax Margin (%)

24.34

17.13

20.03

Cash Profit Margin (%)

19.30

15.18

16.25

Adjusted Net Profit Margin (%)

15.98

11.35

12.30

Return on Capital Employed (%)

28.98

19.61

24.04

Return on Net Worth (%)

27.42

18.56

22.34

 

 

LOCAL AGENCY FURTHER INFORMATION

 

HISTORY

 

The company was incorporated on 25th August, 1947 at Nagda in Madhya Pradesh having Company Registration Number 410.

 

Grasim Industries, formerly Known as Gwalior Rayon Silk Manufacturing. (Weaving) Company, was incorporated in 1947 and commenced operations in 1950.

 

The company which commenced operation in 1950 by manufacturing fabrics using imported rayon (a manmade cellulosic fibre) at Gwalior has diversified into cement and became the third largest producer of cement in India. The company is also equally successful in Viscose Stable Fibre. The company has successful JVs abroad that include viscose staple fibre plants in Thailand and Indonesia and Carbon black plants in Thailand and Egypt and pulp plant in Canada.

 

The company’s joint ventures in India are Mangalore Refinery and Petrochemicals, Bihar Caustic and Chemicals, Tanfac Industries, Bina Power Supply Company, Birla AT and T Company, Dharani Cement Company, the companies subsidiary are Kerala Spinners, Sun God Trading and Investments and Samruddhi Swastik Trading and Investment.

 

The company, a constituent of Aditya Birla group, is one of the most successful diversified companies. It has a presence in VSF, pulp and chemicals (39% of total gross sales in FY 2000-01), cement (39%), sponge iron (8%) and others (8%).

 

Its joint ventures abroad include viscose staple fibre plants in Thailand and Indonesia and carbon black plants in Thailand and Egypt and pulp plant in Canada. Joint ventures in India are Mangalore Refinery and Petrochemicals, Bihar Caustic and Chemicals, Tanfac Industries, Bina Power Supply Company, Birla AT&T Company, Dharani Cement Company; Grasim's subsidiaries are Kerala Spinners, Sun God Trading and Investments and Samruddhi Swastik Trading and Investments.

 

After consolidating its cement business by acquiring the cement operations of Indian Rayon and picking up strategic stakes in Dharani Cements and Shree Digvijay Cement, Grasim has become the third largest producer of cement in the country. The acquisitions have also helped Grasim to improve its geographical profile. The consolidation and the resultant economics of scale, improved logistics and operational synergies have strengthened its position.

 

In FY 2000-01, the company posted a sharp improvement in its performance. Three major factors have contributed to the sterling performance. Firstly, there was an all round growth by way of heightened production and turnover volumes along with higher realizations. Secondly, there were savings in operating costs resulting from on-going modernization efforts, up-gradation of plants and energy optimization. Thirdly, there was a reduction in financing cost through restructuring of high-cost debt coupled with effective fund management and reduction of debts.

 

To grow its cement business and to sustain its market share, Grasim has envisaged a capital expenditure of Rs 5300 millions.

 

MILESTONES

 

1947 – Company Incorporated

 

1950 – Commenced Operations

 

1954 – Company commenced rayon production at Nagda, Madhya Pradesh

 

1962 – Company incepts an Engineering Division to provide plant and machinery for VSF.

 

1963 – Company set up its first rayon grade pulp plant at Mavoor (Kerala) – the first of its’ kind plant with rayon grade pulp being made from bamboo and other hardwoods.

 

Company purchased a composite textile mill at Bhiwani (Haryana)

 

1968 – Rayon production commenced at Mavoor (Kerala)

 

1972 – Another pulp plant big production at Harihar (Karnataka) – a completely indigenous plant based on company’s own engineering and know-how.

 

At Nagda, Madhya Pradesh the company commenced production of rayon grade caustic soda, a major raw material for VSF production, another step towards being self-reliant.

 

1977 – At Harihar (Karnataka), the company’s third rayon plant was into production.

 

1985 – Vikram Cement – the company’s cement plant was on stream at Jawad (Madhya Pradesh).

 

1987 – Vikram Cement’s second production line was commissioned.

 

1991- A third production line was added at Vikram Cement.

 

1992 – The company established Birla International Marketing Corporation (BIMC), a Merchant Exporter.

 

1993 – Vikram Ispat, India’s third largest gas-based sponge iron plant, was commissioned. Birla Consultancy and Software Services set up to provide consulting services in the IT area and for software development.

 

1995 – The company commissioned two Greenfield cement plants – the Grasim Cement at Raipur (Madhya Pradesh) and Aditya Cement at Shambhupura (Rajasthan). The company set up tow new spinning units – Elegant Spinners at Bhiwani (Haryana) and Vikram Woollens at Malanpur (Madhya Pradesh).

 

1997 – The first phase of company’s fourth VSF plant was commissioned at Kharach (Gujarat).

 

1998 – The company acquires Shree Digvijay Cements Limited.

 

Through a restructuring exercise, the cement business of Group Company, Indian Rayon and Industries was transferred to company.

 

1999 – The company’s VSF and Rayon Grade Pulp units at Mavoor closed down due to lack of raw materials.

 

2000 – The Lawson Competency Centre was set up as division of Birla Consultancy and Software Services, the software arm of company, following a tie up with Lawson Competency Centre (U.S.A.), among Fortune’s top five private software companies.

 

Birla Consultancy and Software Services spun off, became separate entity, Birla Technology Limited.

 

2001 – The company has commissioned 1.0 millions TPD grinding unit at Bhatinda, Punjab on December 2001.

 

2001-02 – Gwalior fabric unit was sold to Melodeon Exports and decided to close the Mavoor plant in Kerala. The company also divested its entire stake in Birla Technologies, a software subsidiary of the company to PSI Data Systems.

                         

In November 2001, Grasim acquired a strategic 10% equity stake in Larsen and Toubro, the second largest player in the cement industry, for Rs 7665 millions. The stake was acquired from Reliance Industries.

 

On 26th February 2002, the Board of Directors of the company approved the divesting of its loss making fabric-manufacturing operations at Gwalior to Melodeon Exports and its Associates. The Gwalior unit, with a block value of Rs 150 millions would be sold for a negative consideration of Rs 150 millions.

 

Business:

 

The company is also engaged in consultancy services, technical know-how, basic and detailed engineering and supervision of erection and commissioning.

 

Generic Names of Principal Products / Services of the Company are:-

 

Item Code No.

Product Description

550410.00

Staple Fibre

252329.01

Grey Portland Cement

720310.00

Sponge Iron

 

The VSF business put up a creditable performance. Amidst intense competition from Polyester industry, they improved realizations by 6%, undeterred by the severe water scarcity arising out of poor monsoons. In fact, company’s plants at Nagda and Harihar had to be shut for 45 days and 75 days respectively. To continue to service customer needs uninterruptedly, the company operated its VSF manufacturing facilities at more than their rated capacities and shored up its inventories. These are now at a comfortable level as the buffer for the current quarter for this fiscal had been built. Expansion of VSF capacity at all its plants was yet another forward looking step taken by the company. With an increase of 31075 MT, the total VSF capacity stands raised to 251850 MT at the end of FY 2004.

 

The company’s cement business has been the growth driver. Its performance has been notable, recording a growth of 7%, both in production and sales, even as the industry grew by 5%. The share of blended cement in the total cement production rose from 35% to 46%. Despite realizations flat, operating margins were higher. Higher sales volumes and cost optimization measures in operations and logistics led to the improved performance of this business.

 

The Sponge Iron Business did remarkably well too. Production and Sales volumes were up by 12% and 11% at 687272 MT and 676921 MT respectively. Realization surged by 44% to Rs. 9188 per MT. Viewed in the backdrop of increased input cost to higher usage of naphtha and higher price of pellets and iron ore, the performance of the division had been commendable.

 

The chemical business posted an impressive result registering an all round growth of 4% over the previous year. ECU realization was up by 13% over the corresponding year.

 

Resultant from the measures on operational efficiencies through de-bottlenecking, plant upgradation, energy reduction and modernization processes has resulted in bolstering productivity.

 

Operational excellence, cost optimization, effective financial management which are at the core of company’s processes, coupled with continuous restructuring had led in no small measure to company’s exemplary results.

 

The company has technical collaboration with Udhe GmbH, Germany for manufacture of caustic soda by membrane cell in Caustic Soda Division.

 

The company's plants at Nagda, Harihar, Jawad, Raipur, Sambhupura and Jodhpur have been accredited with ISO 14001 Certification.

 

The company exports machinery and equipment for viscose staple fibre, Sulphuric acid, carbon-bi-sulphide and alum plants on turn-key basis and technical consultancy services to Cuba, Indonesia, Kenya, Korea and Thailand.

 

The company imports special instruments and special metal sieve from Germany and UK.

 

The company is in trade terms with:-

 

·         Fine Polycolloids Private Limited

·         Sankalp Chemical, Mumbai

·         VRW Refractories

·         Bright Star Industries

 

 

The Company has posted an excellent performance for the year under review.

Gross Turnover at Rs.96080.000 millions registered a 26% increase over the corresponding year. Net Profit rose by 78% at Rs.15360.000 millions. The Cement and VSF businesses coupled with cost optimization measures have been the growth drivers. 

 
The performance of the VSF business has been commendable on all operating parameters. Sales volumes grew by 3% at 250,727 tons. Realizations improved by 16% Rs.85, 729 per ton, which helped offset the steep rise in input costs. The robust growth in the VSF business is a reflection of the shift in consumer preference towards cellulosic products. The Cement business posted a not able performance, propelled by the strong growth in demand and realizations. Capacity utilization was higher at 118%.

 

Sales volumes appreciated by 4% at 14.52 Mn. tons. Operating profits were higher, despite the steep rise in fuel and freight costs, on the back of improved realization. The increase in blended cement ratio and better economies of scale also contributed well to the increased profitability.

 

The White Cement business too performed well. Production and sales volumes rose by 4% and 6% respectively. Realizations rose by 8%. 

 

The Sponge Iron business remained under pressure, largely due to the inadequate availability of natural gas which restricted capacity utilization and the sharp increase in the cost of key inputs. While Sales volumes were up by 19%, average realizations remained flat owing to pressure from coal based sponge iron segments. 
 
The performance of the Chemical business was subdued due to the break down of a Captive Power Plant, which remained shutting during the 2nd and 3rd quarters. Besides, the water shortage during the first quarter also impacted operations. Both Production and Sales were thus affected. The abnormally low prices of Chlorine and Hydrochloric acid resulted in lower realizations, again impairing profitability. 

 

Management Discussion and Analysis

 

OVERVIEW: 
 
The Indian economy has been cruising well with GDP growth at 9% plus for two consecutive years. Strong consumption growth together with buoyancy in exports as well as an upswing in the investment cycle has helped India register double-digit industrial growth in FY07. Riding on this momentum in the economy, the Company has posted excellent performance, with revenue and profits touching new high. 

 

Performance Review: 


VSF business has posted a good performance with all round improvement production, sales and in profitability. A strong demand for cellulosic fibres coupled with the Company's strategy of increased focus on specialty fibres and concentrating on emerging textile hubs has driven the performance. Not with standing the suspension in operations for 48 days on account of water shortage at Nagda Plant, capacity utilization was higher at 93%, vis-a-vis 90% during the last year. Sales volumes at 250,725 tonnes grew by 3%. As prices ruled strong, the average realizations moved up 16% at Rs.85, 729 per tonnes from Rs.73, 786 per tonnes during the previous year. A change in the product mix with a higher share of specialty fibre boosted realizations. The increased realizations helped in offsetting the steep rise in input costs, particularly pulp. Operating margins rose from 25.9% to 31.0%. 
 
Sector Outlook: 


The long-term outlook for the VSF business remains positive. On the demand front, global VSF consumption has been growing over the past five years, fueled by an increasing preference for comfort fabrics due to the changing climatic pattern coupled with rising income levels. The demand for VSF in India is also projected to be strong on account of opportunities thrown up by the Quota abolition. 

 

Business Outlook: 


The Company enjoys a leadership position in this sector. To leverage on the growth opportunities, the Company is augmenting capacities at its various locations. At Kharach (Gujarat), the capacity is being ramped up by 63,875 TPA. It is expected to be completed by end FY08. The total investment on the expansion and modernization at its various plants would be to the tune of Rs.7520.000 millions. The Company is also in the process of obtaining regulatory approvals for expanding its capacity at Harihar (Karnataka) by around 31,000 TPA. Upon completion of expansion plans, the Company's VSF capacity would stand enhanced at 365,000 TPA. Additionally, the capacity of its Chinese joint venture will be ramped up from 30,000 TPA to 60,000 TPA by Q2FY09. 
 
The captive pulp availability is being strengthened by conversion of the AV Nackawic facility in Canada, from paper grade pulp to dissolving grade pulp by Q1FY09. The strengthening of backward linkage in pulp comes at an appropriate time as global pulp prices are hardening. 


The Company continues with its efforts of positioning specialty VSF like Spun Dyed Fibre, Modal, Viscose Plus, etc., at the premium end of the fibre market by leveraging its research facility and forming alliances with end-product manufacturers. The Company, being the lowest cost producer of quality VSF, is fully geared to capitalize on the increased demand for the product. 

 

Performance Review: 


 The performance of the Chemical business was constrained due to the breakdown of one of the Captive Power Plants, which remained shutting during the 2nd and 3rd quarters. Its operations were also affected due to the water shortage during the first quarter of the year. Both production and sales, as a result, were impacted. The abnormally low prices of chlorine and hydrochloric acid resulted in ECU realizations being lower by 6%.

 

Along with lower volumes, this impacted the margins adversely. Normalcy in operations was restored only in Q4FY07. 
 
To improve efficiencies, the remaining caustic soda plant based on mercury cell technology has been converted into the energy efficient membrane cell technology. The Company increased its caustic soda capacity from 190,800 TPA to 258,000 TPA during the year. 

 
Sector Outlook: 

 
The demand for caustic soda is expected to grow at a healthy rate, buoyed by the anticipated high growth in domestic Alumina production. However, as new capacity additions come in, prices are expected to remain subdued due to the supply pressures. 

 

 

Business Outlook: 


The Company will continue to focus on a set sweating and improving efficiencies. With the accrual of the full benefits of expanded capacity, the Chemical business is expected to do better in the next year. 

 

Performance Review: 


The Cement business posted a good performance. Its capacity utilization was at 110%, driven by healthy demand. Production grew by 4% from 13.83 million tonnes in FY06 to 14.42 million tonnes in FY07. Sales volumes too rose by 4% at 14.52 million tonnes. Average realizations grew by 40% vis-a-vis the low level of last year.

 

However, the gains from higher price levels were partially offset by the steep rise in fuel and freight costs. Road freight cost increased considerably with higher petroleum prices and restrictions on loading.

 

Higher prices of imported coal and petcoke together with purchase of indigenous coal from the open market led to the rise in fuel cost.

 

Operating margins expanded to 33.2% with higher realizations, increase blended cement production and better economies of scale. 


The Company has been aggressively marketing value-added products in its White Cement business. Revenues increased by 30% with higher contribution from value-added products and better realizations. Sales volumes were higher by 6% as against the industry growth of 4%. 

 
The Ready Mix Concrete (RMC) business has been growing at a fast pace year after year. RMC sales volumes were higher by 23% at 14.2 lac cubic meters as compared to 11.6 lac cubic meters in the previous year. 
 

Performance of Cement Subsidiaries: 

 

The Company's subsidiaries, UltraTech Cement Limited and Shree Digvijay Cement Company Limited (SDCCL), together account for 58% of the total consolidated cement capacity of 31 million TPA. 

 

The performance of UltraTech was impressive as well. Effective capacity utilization increased from 88% to 101%, with improvement across al units.

 

Aggregate sales volumes grew by 14%. Cement sales were higher by 7% at 14.6* million tonnes. With export prices ruling firm in the Middle East, clinker exports doubled from 1.1 million tonnes to 2.2 million tonnes during the current year. 

 
Domestic cement realizations at Rs.2, 934 per tonnes increased by 39% from the depressed level in the last year. Export realizations of cement at Rs.2, 871 per tonnes grew by 16%. Despite rising freight charges and cost of imported coal, operating margins rose from 19.0% to 31.2% supported by improved capacity utilizations, higher volumes, better realizations and higher share of blended cement. 


Profit after Tax grew from Rs.2251.000 millions in FY06 to Rs.7849.000 millions in FY07. 

SDCCL has registered a steady performance. Despite operations being impaired on account of break down in the first quarter and heavy rains in the second quarter, revenues increased by 19% on the back of higher realizations. The combined cement and clinker volumes were lower by 11% at 0.93 million tonnes due to the disruption in operations. Profit before exceptional items at Rs.533.000 millions was higher by 59%, vis-a-vis Rs.336.000 millions recorded in the previous year. 

 

During the first half, SDCCL completed a Rights issue of 18 shares for every 1 share, at par, amounting to Rs.1342.000 millions. The Company has invested Rs.721.000 millions in the Rights issue. 

 

 

 

Outlook for Grey Cement Business: 

 
The Cement industry has demonstrated a healthy growth of 8.6% in the last five years. With the Indian economy continuing its growth path, cement consumption is expected to grow at 9-10%. The increase in industrial investment and expectations of higher spending on infrastructure portend well for the sector. The robust demand from residential and commercial construction will continue to be the major growth drivers. 

 
Capacity additions have been lower than the consumption growth in the last two years. Consequently, the cement industry increased the capacity utilization levels to cater to the higher demand. Utilizations are expected to remain at higher level during FY08. Enthused by the industry performance during the last 15 months, additional capacities of around 90 million tonnes have been announced by different manufacturers. These capacities, as per such announcements, are expected to be commissioned over three year period, creating an imbalance in demand and supply resulting in impact on realization. However, impact be partially mitigated by increased volumes and improved cost efficiencies. 

 
Capex Plan: The Company's expansion plans at Shambhupura and Kotputli in Rajasthan are progressing as scheduled. The plants are likely to be commissioned by Q4FY08 and Q1FY09 respectively. Both the plants will also have captive thermal power plants. The Company has envisaged a total capital outlay of Rs.34580.000 millions on capacity expansion, modernization, de-bottlenecking, setting up of grinding unit at Dadri, RMCs and captive power plants. 

 
The capex plan of UltraTech, which includes setting up of a4 Mn. TPA project at Tadpatri (Andhra Pradesh) and captive power plants at different locations, is also on track. The Tadpatri project is expected to be commissioned by Q4FY08. UltraTech plans to invest over Rs.25300.000 millions on capacity expansion, thermal power plants, modernization, RMCs etc. 

 
Upon completion of these expansions, the Company's cement capacity, including that of its subsidiaries, will go up by 14 million tonnes to 45 million tonnes. The Company is focusing on timely commissioning of projects and reducing costs through increase in share of captive power, optimizing logistics and higher blended cement production. 

 

Performance Review: 

 
The Sponge Iron business remained under pressure, largely due to the inadequate availability of natural gas and a sharp increase in the cost of iron ore and natural gas. Average realizations remained flat owing to pressure from coal based sponge iron segment. Sales volumes were up by 19% aided by higher demand. 

 

Sector Outlook: 

 
The sponge iron industry will continue to grow in the near future, given the promising steel sector outlook. Prices are expected to remain firm with reduced scrap supply from CIS and higher demand from emerging markets. However, coal based sponge iron segment will continue to be a threat. 

 
Business Outlook: 

 
The profitability of sponge iron business would continue to be under pressure due to poor gas availability. The prospects for the business may improve with adequate gas availability by end CY 2007 as the Dahej-Dabhol pipeline and the spur pipeline connecting the same to the existing GAIL pipeline are expected to be commissioned by then. However, pricing of gas is still uncertain and remain a concern. The Company's thrust would continue to be on optimum utilization of plant capacity and enhancing volumes. 

 

Performance Review: 

 
The Textile business registered a volume growth of 23% with improvement in both domestic as well as export segment due to the increased focus on supplies to Indian and global brands. Operating margins remained subdued owing to increase in input cost and additional advertisement expenses on brand building.

 
 

Business Outlook: 

 
Modernization of the Company's weaving section has been completed. To reduce power cost, a thermal power plant of 8 MW is under construction at an outlay of Rs.400.000 millions. These measures will help in improving profitability.

 

Fixed Assets

 

 

Website details attached:

 

The Emerging Cement Major

 

Subject is a company of the Aditya Birla Group, ranks among India's largest private sector companies, with consolidated net revenues of Rs.141 billion (FY2007).


Starting as a textiles manufacturer in 1948, today subject’s businesses comprise Viscose Staple Fibre (VSF), Cement, Sponge Iron, Chemicals and Textiles — in all of which the company holds a dominant position.

 

In July 2004, subject acquired a majority stake and management control in UltraTech Cement Limited, the de-merged cement business of Larsen & Toubro Limited (L&T). One of the largest of its kind, in the cement sector, this acquisition catapulted the Aditya Birla Group at the top of the league in India. The Group's combined capacity stands raised to 31 million TPA, of which 17.0 million tpa capacity comes from UltraTech and 1.1 million tpa from Shree Digvijay Cement Co. Ltd, another subsidiary of Grasim.

 

Between Grasim and its subsidiaries, the Group has 11 composite plants, seven split grinding units, four bulk terminals — inclusive of one in Sri Lanka and 10 ready-mix concrete plants. Importantly, it gives the Group a strong national presence, with a leadership position in 17 states.

 

Viscose staple fibre


The Aditya Birla Group is the world's largest producer of VSF, commanding a 23 per cent global market share. The company meets India's entire domestic VSF requirements.


Cement


The Aditya Birla Group is the 11th largest cement producer in the world and the seventh largest in Asia

 

Sponge iron


It is the largest merchant producer of sponge iron in India.

 

Chemicals
Grasim has India's second largest caustic soda unit.

 

Textiles


Its premium brands, the Grasim and Graviera range of fabrics, have distinctively positioned themselves as 'the power of fashion'.

All of Grasim's units have earned ISO 9002 and 14001 certifications.


Product quality, innovation and eco-friendliness are a hallmark of all the company's divisions.

 

Capacities

Division

Capacity

Viscose Staple Fibre (VSF)

2,66,450 tpa

Grey cement

 

i

Grasim Industries

13.12 million tpa

ii

Shree Digvijay Cement

1.08 million tpa

White cement

475,000 tpa

Sponge iron

900,000 tpa

Chemicals

190,800 tpa

Textiles

18.0 million metres a year

 

 

PRESS RELEASE:

 

10th October 2007

 

Cement performance for September 2007

 

The Aditya Birla Group's cement production for the period April-September 2007 has moved up by 6.52 per cent at 151.86 lakh mt as against 142.57 lakh mt during April-September 2006. Dispatches grew by 6.02 per cent at 150.83 lakh mt in April-September 2007 vis-a-vis 142.27 lakh mt in the corresponding period last year.

 

Cement production for the month of September 2007 rose by 2.42 per cent at 23.84 lakh mt while dispatches moved up by 1.59 per cent at 23.51 lakh mt in September 2007.

                                                                                                 

Grasim, The Aditya Birla Group’s Flagship Company - Reports Excellent Performance for FY 2005

Net Profit after Tax (Before Diminution) at Rs. 9780 MILLIONS, Up by 26%, Proposes 160% Dividend

Mumbai, Maharashtra, India, Friday, April 29, 2005 -- (Business Wire India)

 

Grasim, the flagship Company of the Aditya Birla Group, has posted commendable performance for the financial year ended 31st March 2005. Capacity utilization, strengthening of operational efficiencies and marketing of higher volumes of an enriched product mix have been key to this outstanding success.


The Company has attained an all round growth, with higher production, sales volumes and realizations in all of its major businesses. While Turnover was up by 19% at Rs.62470 millions, Profit before taxes and diminution was higher by 30% at Rs.13960 millions. Notwithstanding a considerably higher provision for tax expense, Net Profit (before considering diminution in value of investment/loans) rose appreciably by 26% to Rs.9780 millions.


As a matter of prudence, the Company has provided for a sum of Rs.920 millions towards permanent diminution in the value of investment/ loans to its subsidiary, Shree Digvijay Cement Co. Limited PAT, even after this charge for diminution, has risen by 14%.


The Company has posted impressive performance. Turnover at Rs.7, 6070 millions mirrors a 6% increase over the corresponding year. Net Profit was lower at Rs.8630 millions, constrained by the Company's Sponge Iron business, which was constricted by the phenomenal rise in input costs and non-availability of natural gas. The commendable performance of the Cement business, cost optimization measures and substantially reduced interest costs helped mitigate the impact on profits to a great extent. 

 
The VSF business' performance has been good. Despite the record global cotton crop for the second consecutive year and disturbances in European markets post-quota abolition, the business recorded its highest ever sales volumes of 242,399 tons. This was made possible due to a healthy domestic demand and higher VSF exports to South Asian countries. The Company took a conscious decision to scale down its production with a view to reducing inventory levels. As a result, production was lower by 8% at 228,981 tons. Realizations were lower at Rs.73, 786 per ton, reflecting the lower prices of cotton and VSF globally. 

 
The Cement business posted an excellent performance. Higher capacity utilization increased sales volumes and better realizations translated into improvement in operating margins and increased profitability. Production at 13.83 Mn. tons and sales volumes at 13.99 Mn. tons were higher by 11% over the corresponding year. Realizations grew reflecting better pricing environment. Reduced power consumption, increase in blended cement ratio and better economies of scale contributed in no small measure. 

 
The White Cement business too performed exceedingly well. Production and sales volumes rose by 11% and 12% respectively. Realizations increased by 7%. 

 
Sponge Iron business remained under severe pressure during the year. Production was limited due to non- availability of natural gas. Consequently, sales volumes declined. Operating margins were squeezed due to a steep increase in the prices of inputs, viz., natural gas, iron ore and pellets. This impacted the overall profitability of the Company. 

 
The Chemical business recorded an improvement. Both production and sales were up by 2%, while realizations amplified by 9% at Rs.20, 594 per ton. 

 
An unrelenting thrust on operational efficiencies through de-bottlenecking, plant up-gradation, energy reduction and modernization processes has enabled the Company to sustain its performance.

 

PRESS RELEASE

4 December 2007

Grasim to divest equity in Digvijay Cement to Cimpor

Grasim Industries Limited, a flagship of the Aditya Birla Group, announced sale of its entire equity stake in Shree Digvijay Cement Company Ltd. (SDCC) to Cimpor - Cimentos De Portugal, SGPS, SA ("Cimpor") through its subsidiary, Cimpor Inversiones, S.A. ("Cimpor Inversiones") at a purchase consideration of Rs. 3220 Millions. This translates into a sale price of Rs. 42.50 per share.

The transaction was approved by the Board of Directors of Grasim at a meeting held today and a Share Purchase Agreement has been signed between the parties. Cimpor Inversiones will make a public offer for a further 20 per cent only of the equity in SDCC in compliance with SEBI regulations and on closing it will control SDCC.

Grasim acquired SDCC in 1998 to gain a presence in the Gujarat market, through SDCC's 1.07 million tpa capacity. Subsequently, Grasim acquired a further 6 million tpa capacity in Gujarat through its acquisition of UltraTech Cement in 2004. This decision to divest its equity in SDCC is primarily intended to rationalise its portfolio of plants.

The combined capacity of the Aditya Birla Group's cement business, which is currently 31 million tpa will move up to 45 million tpa by Q2 FY09, even after the disposal of SDCC stake. This will be achieved through new plants currently under installation in both Grasim and its subsidiary, UltraTech Cement Limited. This reflects the Group's continued commitment to accelerated growth in the cement business.

Grasim holds 75,816,681 equity shares of Rs.10 each in SDCC aggregating to 53.63 per cent of SDCC's equity share capital. This stake will be transferred to Cimpor Inversiones on receipt of all requisite approvals and receipt of consideration by Grasim.

The transaction is expected to be completed by March 2008.

Grasim's choice of Cimpor as the preferred purchaser is based upon Cimpor's credentials, their financial strength and their stated practice of retaining employees of an acquired entity.

ABN Amro Bank was the exclusive financial advisor and Amarchand & Mangaldas & Suresh A. Shroff & Co., the legal advisor to Grasim on the transaction. Standard Chartered Bank was the exclusive financial advisor and AZB & Partners the legal advisor to Cimpor on the transaction.

About Cimpor

Cimpor is the biggest Portuguese cement company and ranks ninth among world multinational cement companies, with presence in 11 different countries — Portugal, Spain, Morocco, Tunisia, Egypt, Brazil, South Africa, Mozambique, Cape Verde, Turkey and China — with a total installed capacity of 28 million tons of cement. Cimpor is listed on the Lisbon Stock Exchange.

About SDCC

SDCC is situated at Digvijaygram in Gujarat having a cement capacity of 1.07 million tpa. For the year ended 31 March 2007, SDCC reported a turnover of Rs. 2.6 billion and net profit of Rs. 540 million.

About Grasim

Grasim Industries Limited, a flagship of the Aditya Birla Group, ranks among India's largest private sector companies, with a consolidated turnover of Rs.141 billion and a consolidated net profit of Rs.20 billion (FY2007). Grasim - a VSF and cement major with strong competitive edge and global sized operations has domestic leadership in cement and is a leading global player in VSF business.

About Aditya Birla Group

The Aditya Birla Group is India's first truly multinational corporation. The Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. A US$ 24 billion conglomerate, with a market capitalisation of US$ 31.5 billion, it is anchored by an extraordinary force of 100,000 employees belonging to over 25 different nationalities. Over 50 per cent of its revenues flow from overseas operations.

 

 

 

CMT REPORT (Corruption, Money Laundering & Terrorism]

 

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

 

1]         INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

 

2]         Court Declaration:

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

 

3]         Asset Declaration:

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

 

4]         Record on Financial Crime:

            Charges or conviction registered against subject:                                                  None

 

5]         Records on Violation of Anti-Corruption Laws:

            Charges or investigation registered against subject:                                                          None

 

6]         Records on Int’l Anti-Money Laundering Laws/Standards:

            Charges or investigation registered against subject:                                                          None

 

7]         Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

 

8]         Affiliation with Government:

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

 

9]         Compensation Package:

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

 

10]        Press Report:

            No press reports / filings exist on the subject.

 

 

CORPORATE GOVERNANCE

 

MIRA INFORM as part of its Due Diligence does provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

 

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

 

 

CONTRAVENTION

 

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs. 39.32

UK Pound

1

Rs. 77.53

Euro

1

Rs. 57.91

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

8

PAID-UP CAPITAL

1~10

8

OPERATING SCALE

1~10

8

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

8

--PROFITABILIRY

1~10

8

--LIQUIDITY

1~10

8

--LEVERAGE

1~10

8

--RESERVES

1~10

8

--CREDIT LINES

1~10

8

--MARGINS

-5~5

--

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

NO

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

NO

--EXPORT ACTIVITIES

YES/NO

YES

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

72

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                 Payment record (10%)

Credit history (10%)                    Market trend (10%)                                Operational size (10%)

 

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

NR

In view of the lack of information, we have no basis upon which to recommend credit dealings

No Rating

*

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions