Grasim's yarn business dips despite strong overall performance

Grasim Industries reported a positive overall performance for the quarter ending March 2024, with a 15.54 per cent increase in consolidated net profit to Rs 2,721.81 crore. However, their Cellulosic Fibres segment, which manufactures yarn, faced a marginal decline in revenue. Cellulosic fibres revenue dipped to Rs 3,761.75 crore from Rs 3,764.06 crore in Q4 FY23. The company attributed this decline to two factors:

A change in India’ MSME policy impacted demand and inventory build-up in the textile value chain. Increased competition from cheaper imports of Cellulosic Fashion Yarn (CFY) from China, further affected demand in an already weak market. Despite the yarn segment's struggle, Grasim's other businesses like Building Materials (including UltraTech Cement) and Financial Services (Aditya Birla Capital) witnessed significant growth. Overall, Grasim's revenue from operations increased 12.74 per cent to Rs 37,727.13 crore, driven by strong performances in its core businesses. However, the marginal decline in the yarn segment highlights the challenges faced by the textile industry due to policy changes and import competition.