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BW Businessworld

Staying Strong

The company’s retailisation strategy helped it to grow its active customer base to 20 million through more than 850 branches and over 2,00,000 channel partners and several bank partners.

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As per Kumar Mangalam Birla, Chairman, Grasim Industries, the financial year 2019-20 was not “just another fiscal”. “Never has the transition between two financial years been as tumultuous for the global economy. The pandemic is, no doubt, a sobering reminder of how the world can change in unforeseeable ways,” he told the shareholders in company’s annual report. 

But Grasim, which traces its very origin to the spirit of nation-building, came out stronger. Its success over eight decades, as per Birla, is an emphatic endorsement of Atmanirbhar Bharat. “Grasim today is home to worldbeating fibre and cement companies. The unmatched global scale built across diverse sectors like fibre, chemicals and cement is on the back of decades of relentless innovation, soaring and fearless ambition, incessant cost consciousness and nimbleness. These are the qualities of an Atmanirbhar Grasim which has been nourished from India and flourished globally,” Birla said.

Grasim delivered a strong performance in FY20 despite the disruptions caused by the onset of the pandemic in the last few weeks of FY20. On a consolidated basis, Grasim’s revenue for FY2019-20 stood at Rs 77,625 crore and EBITDA at Rs 13,846 crore. In FY18, the revenue was Rs 57,338 crore with EBITDA of Rs 10,881 crore on a consolidated basis. 

Overall, the group’s revenue contribution is dominated by cement. It contributed Rs 42,125 crore in FY20 followed by financial services (Rs 16,706 crore), viscose (Rs 9,237 crore), and chemicals (Rs 5,504 crore) with others and inter-segment eliminations contributing another Rs 4,053 crore.

The VSF Business Advantage 

Grasim’s Viscose Staple Fibre (VSF) business delivered superior operational performance in FY20, with all its plants operating at full capacity. The VSF business reported best production and sales volume of 567 KT and 554 KT in FY20, up 5 per cent and 2 per cent year on year. The FY20 revenue from the VSF business stood at Rs 9,237 crore and EBITDA at Rs 1,339 crore. The fall in EBITDA due to the loss in realisations, was partly cushioned by the reduction in pulp prices and various cost optimisation programmes undertaken during the year, the company said in the report.

Cementing Success 

UltraTech Cement, a subsidiary of the company, has done well in the past few years. In 2018-19, it clocked double-digit growth of 13 per cent only to see it decline in FY20 due to a number of reasons including overall economic slowdown, the slump in capital expenditure for infrastructure and the housing sectors. UltraTech reported net revenues of Rs 42,125 crore and an EBITDA of Rs 9,930 crore during FY20. 

Aditya Birla Capital’s consolidated revenue grew 11 per cent year on year to Rs 16,792 crore. The consolidated profit after tax (after minority interest) reflected a growth of 6 per cent year on year to Rs 920 crore. The company raised Rs 2,100 crore of equity capital in September 2019 through a preferential allotment to the promoter/promoter group and marquee investors. The overall lending book (NBFC and housing finance) stood at just under Rs 60,000 crore and the gross premium (across life and health insurance) grew to Rs 8,882 crore.

The company’s retailisation strategy helped it to grow its active customer base to 20 million through more than 850 branches and over 2,00,000 channel partners and several bank partners.

Aditya Birla Capital has robust risk management frameworks and continues to focus on quality growth, while creating value across its businesses.