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Grasim
Grasim expects cement industry capacity utilisation to be below 80% (of installed
nameplate capacity) over the next two years given that 45 mn tonnes of prevalent
excess capacity, ramp up issues relating to new plants and the infrastructure bottlenecks
in the system. Demand growth is likely to be around 8% in FY12E.
Overall cement costs have seen a c7% increase in the last 3 months due to (a) coal price
increase by CIL (b) railway freight increase and (c) excise duty hike. These costs have
already been largely passed through. Margins in cement are expected to remain volatile
with EBITDA/t settling around cINR 1,000 in the medium term.
VSF continues to be a niche business and Grasim continues to benefit from its backward
integration. While pulp costs have seen a sharp increase due to increased paper
demand, the global cotton shortage has helped in passing the cost pressures. Grasim
expects the current 40% margin in this segment to settle around 30% levels in the long
term on a consistent basis.
To support the pulp requirements of the brownfield VSF expansions, Grasim is looking at
possible pulp asset opportunities in Sweden and Canada.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Grasim
Grasim expects cement industry capacity utilisation to be below 80% (of installed
nameplate capacity) over the next two years given that 45 mn tonnes of prevalent
excess capacity, ramp up issues relating to new plants and the infrastructure bottlenecks
in the system. Demand growth is likely to be around 8% in FY12E.
Overall cement costs have seen a c7% increase in the last 3 months due to (a) coal price
increase by CIL (b) railway freight increase and (c) excise duty hike. These costs have
already been largely passed through. Margins in cement are expected to remain volatile
with EBITDA/t settling around cINR 1,000 in the medium term.
VSF continues to be a niche business and Grasim continues to benefit from its backward
integration. While pulp costs have seen a sharp increase due to increased paper
demand, the global cotton shortage has helped in passing the cost pressures. Grasim
expects the current 40% margin in this segment to settle around 30% levels in the long
term on a consistent basis.
To support the pulp requirements of the brownfield VSF expansions, Grasim is looking at
possible pulp asset opportunities in Sweden and Canada.
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