The company’s sales performance in the quarter was underwhelming as revenue from operations jumped 182 per cent year-on-year to Rs 3,762.68 crore, but was below Street’s expectations.
The high year-on-year jump in revenues was largely on account of a depressed base in the year-ago quarter, which was impacted by the national lockdown to contain the spread of the Covid-19 infections.
“The company’s operations and revenue were marginally impacted on account of disruption in economic activity due to Covid-19. The management believes that impact is short term and temporary in nature and there is no significant impact on recoverability of carrying value of its assets and future operations,” Grasim Industries said.
Grasim Industries said that the second wave of the pandemic had an impact on demand in the textile industries that affected its viscose business. India observed selective restrictions on the business activities during most of Q1FY22, which impacted the sale of textile products, leading to an accumulation of inventory in the value chain, the company said.
The company also said that its chemical business faced marginal impact from the second wave. Grasim highlighted that increase in soda ash prices in the domestic market was muted even as global surge continued during the June quarter.
“The advanced materials business reported its best-ever performance in Q1FY22, driven by strong demand scenario and better pricing environment globally and in India,” Grasim said.
Grasim Industries’ foray into paints business is on track as the company said it is in the process of acquiring land for setting up plants in different states.
On the operating front, Grasim Industries managed to report an operating profit of Rs 805 crore for the quarter ended June as against an operating loss of Rs 126 crore in the year-ago period. The company’s operating margin in the quarter stood at 21.4 per cent.
The second wave of Covid-19 slowed down the pace of economic activity, which was fast recovering. However, with the accelerated pace of vaccination by the government and the receding impact of second wave, the economy is witnessing a strong rebound, Grasim said.
Shares of the company were up 1.2 per cent at Rs 1,509.8 on the National Stock Exchange.
