Grasim chemicals business posts poor financials on oversupply, cheaper imports

Grasim Industries’ chemicals business has reported poor financial performance in the fourth quarter due to an oversupply situation and cheaper imports. The company’s chemicals segment, which includes chlor-alkali, chlorine derivatives, and specialty chemicals, experienced a decline in profit of 47% to Rs 195 crore in the quarter ending March 31, 2024, compared to Rs 368.15 crore in the previous year. Despite achieving its highest ever caustic soda sales volume of 308 KT in Q4FY24, the company’s revenue decreased by 13% to Rs 2,083 crore, primarily due to a significant decline of 28% in ECU realization compared to the previous year.
The ECU (Electrochemical Unit) realization pertains to the income generated from the sale of a standardized unit of chlorine and caustic soda, which are produced through the electrolysis of brine in the chlor-alkali industry. The company has acknowledged that the prices of caustic soda in the local market continue to be affected by oversupply and the availability of cheaper imports.

The chlor-alkali segment is the largest source of revenue, accounting for 54 percent of the total, followed by specialty chemicals at 26 percent and chlorine derivatives at 20 percent.

The specialty chemicals division caters to growing end-use sectors such as construction chemicals, coatings, renewable energy, and electrical and electronics.