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GRASIM INDUSTRIES: Key takeaways
Grasim Industries (Grasim) is the leading player in the Indian Cement industry with 18%
market share and an installed capacity of ~ 52 mtpa through its 60% ownership in
UltraTech (UTCEM). 52 mtpa of installed capacity includes ~3 mtpa of capacities in ETA
Star Cement, UTCEM’s Middle Eastern acquisition during FY2011.
Grasim if the largest producer of Viscose Staple Fiber with capacity of 334 ktpa and 21%
global market share.
Management has indicated that on an average, cement industry should grow by 10%
over long term driven by (1) Government initiative to boost infrastructure spending, (2)
Rural demand emanating from agricultural growth and (3) revival of corporate capex cycle.
However, management has highlighted that short-term pain could persist and the growth
rate could decline if present market condition continues to persist. Industry should ideally
return to normal utilization and operating margin levels by FY2013E. At the same time,
management believes that recovery is expected as cyclical trough is behind us.
Grasim’s VSF business has witnessed strong operational performance driven by robust
demand environment on back of shortage of cotton (substitute) and general revival of
textile industry.
Capacity expansion and capex plans – following are the capacity expansion and
corresponding capex plans of Grasim.
Cement – First phase of capacity expansion involves Brownfield expansion of 9.2 mtpa at
Chhattisgarh and Karnataka along with captive power plant involving a total capex outlay
of Rs56 bn. At the same time, company plans to invest in logistics infrastructure including
bulk terminals, rakes and jetty expansions involving a total outlay of Rs11.5 bn.
VSF business – Grasim plans to set up two VSF plants at Vilayat (120 ktpa) and Harihar
(36.5 ktpa) involving a capex of ~Rs21 bn.
Chemical business – Grasim plans to set up a Chemical plant at Vilayat (182.5 ktpa)
involving a total outlay of Rs7.7 bn.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
GRASIM INDUSTRIES: Key takeaways
Grasim Industries (Grasim) is the leading player in the Indian Cement industry with 18%
market share and an installed capacity of ~ 52 mtpa through its 60% ownership in
UltraTech (UTCEM). 52 mtpa of installed capacity includes ~3 mtpa of capacities in ETA
Star Cement, UTCEM’s Middle Eastern acquisition during FY2011.
Grasim if the largest producer of Viscose Staple Fiber with capacity of 334 ktpa and 21%
global market share.
Management has indicated that on an average, cement industry should grow by 10%
over long term driven by (1) Government initiative to boost infrastructure spending, (2)
Rural demand emanating from agricultural growth and (3) revival of corporate capex cycle.
However, management has highlighted that short-term pain could persist and the growth
rate could decline if present market condition continues to persist. Industry should ideally
return to normal utilization and operating margin levels by FY2013E. At the same time,
management believes that recovery is expected as cyclical trough is behind us.
Grasim’s VSF business has witnessed strong operational performance driven by robust
demand environment on back of shortage of cotton (substitute) and general revival of
textile industry.
Capacity expansion and capex plans – following are the capacity expansion and
corresponding capex plans of Grasim.
Cement – First phase of capacity expansion involves Brownfield expansion of 9.2 mtpa at
Chhattisgarh and Karnataka along with captive power plant involving a total capex outlay
of Rs56 bn. At the same time, company plans to invest in logistics infrastructure including
bulk terminals, rakes and jetty expansions involving a total outlay of Rs11.5 bn.
VSF business – Grasim plans to set up two VSF plants at Vilayat (120 ktpa) and Harihar
(36.5 ktpa) involving a capex of ~Rs21 bn.
Chemical business – Grasim plans to set up a Chemical plant at Vilayat (182.5 ktpa)
involving a total outlay of Rs7.7 bn.
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