According to newspaper reports, Grasim Industries has put a 1.8 million tonnes per annum cement plant up for sale. The plant is located in the east and is expected to fetch the company Rs 5 bn.
Grasim (FY99 Turnover Rs 34.13 bn), part of the Aditya Birla Group of companies, has interests in viscose staple fibre (VSF), cement (28% of sales) (capacity - 10.7 million tonnes), textiles and sponge iron. The company has stated that it is in the process of selling off its sponge iron business.
The reports state that the move has been motivated by the low price realisations in the east, where the plant is located. The main reason for the sluggishness in demand and prices is the aggressive approach adopted by Lafarge (capacity 1.4 million tonnes) in order to garner market share. Lafarge, which had earlier purchased the cement plant from Tata Steel, has been aggressively pushing sales and this has resulted in lower prices. Furthermore, its competitors in the east have witnessed a slackening of demand as Lafarge has grabbed a larger market share.
These reasons are not in itself enough for the company to seek an exit. With Lafarge and Holderbank wanting to step up their presence in India, competition in bound to increase throughout the country. In such a scenario the company would have to face competition and not take the easier route of exiting the business. Not much can be commented upon this unless the company makes a definite statement regarding its intentions.
Larsen & Toubro (L&T) has announced third quarter results of financial year 2016-2017 (3QFY17). The company has reported 1.7% YoY growth in sales while profits have grown 38.9% YoY. Here is our analysis of the results.
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