Segment Analysis of Grasim Industries Ltd.

1. NAME OF THE PROJECT

A study of performance by each segment of Grasim Industries based on Revenue, Profits
and Asset Allocation.
2. OBJECTIVES OF THE PROJECT
The objective of this study is to know as to which segment is performing better than the
others and also to know whether the assets allocated to it are sufficient or insufficient.
3. PERIOD OF STUDY
The analysis is for the year ended March 31st, 2022.
4. SOURCE MATERIAL (ORIGINAL ANNUAL REPORT FROM COMPANY’S WEBSITE)
The relevant data has been taken from the annual report of the company for the year
2021 2022. The relevant information for each segment has been given in the companies
report and the same has been reproduced below. This page contains information about
various areas related to all segments. Only three main areas have been undertaken for
this project, because this is a small and limited study.
(i) Revenue of each segment
(ii) Segment Results (Profit before interest and tax – PBIT) and
(iii) Assets Allocation for each segment

Grasim Indusries Ltd.

Segment wise Report (Page 477 of annual Report for 2021-2022)
5. TOOLS OF ANALYSIS
Common Size Statements showing contribution of each segment towards Revenue,
profit and also showing Assets Allocation.
6. PROCESSING OF THE DATA
The Grasim Industries has five segments:
(i) Viscose – Pulp and Yarn
(ii) Chemicals
(iii) Cement
(iv) Financial Services
(v) Others

(a) Common Size Statement of Sales Revenue

Sales Revenue Percentage of Total Revenue
Segment (₹ in Crores) (%)
1 Viscose - Pulp and Yarn 12,209.85 12.57
2 Chemicals 7,887.88 8.12
3 Cement 52,598.83 54.16
4 Financial Services 22,094.34 22.75
5 Others 2,321.44 2.39
Total 97,112.34 100.00

Calculations:

1. Viscose – Pulp and Yarn Percentage = Viscose – Pulp and Yarn Revenue X 100
Total Revenue

= 12,209.85 X 100 = 12.57%

97,112.34

2. Chemicals Percentage = Chemicals Revenue X 100

Total Revenue

= 7,887.88 X 100 = 8.12%

97,112.34

3. Cement Percentage = Cement Revenue X 100

Total Revenue

= 52,598.83 X 100 = 54.16%

97,112.34

4. Financial Services Percentage = Financial Services Revenue X 100

Total Revenue

= 22,094.34 X 100 = 22.75%

97,112.34

5. Others Percentage = Others Revenue X 100

Total Revenue

= 2,321.44 X 100 = 2.39%

97,112.34
 (b) Common Size Statement of Profit
Profit (PBIT) Percentage of Total Profit (PBIT)
Segment (₹ in Crores) (%)
1 Viscose - Pulp and Yarn 1,246.27 9.21
2 Chemicals 1,203.68 8.90
3 Cement 9,307.41 68.81
4 Financial Services 1,594.64 11.79
5 Others 174.85 1.29
Total 13,526.85 100.00

Calculations:

1. Viscose – Pulp and Yarn Percentage = Viscose – Pulp and Yarn Profit X 100
Total Profit

= 1,246.27 X 100 = 9.21%

13,526.85

2. Chemicals Percentage = Chemicals Profit X 100

Total Profit

= 1,203.68 X 100 = 8.90%

13,526.85

3. Cement Percentage = Cement Profit X 100

Total Profit

= 9,307.41 X 100 = 68.81%

13,526.85

4. Financial Services Percentage = Financial Services Profit X 100

Total Profit

= 1,594.64 X 100 = 11.79%

13,526.85

5. Others Percentage = Others Profit X 100

Total Profit

= 174.85 X 100 = 1.29%

13,526.85

(c) Common Size Statement of Assets Allocation

Assets Percentage of Total Assets
Segment (₹ in Crores) (%)
1 Viscose - Pulp and Yarn 12,873.84 4.87
2 Chemicals 7,704.95 2.91
3 Cement 85,690.55 32.39
4 Financial Services 1,53,499.05 58.02
5 Others 4,812.24 1.82
Total 2,64,580.63 100.00
 Calculations:

1. Viscose – Pulp and Yarn Percentage = Viscose – Pulp and Yarn Assets X 100
Total Assets

= 12,873.84 X 100 = 4.87%

2,64,580.63

2. Chemicals Percentage = Chemicals Assets X 100

Total Assets

= 7,704.95 X 100 = 2.91%

2,64,580.63

3. Cement Percentage = Cement Assets X 100

Total Assets

= 85,690.55 X 100 = 32.39%

2,64,580.63

4. Financial Services Percentage = Financial Services Assets X 100

Total Assets

= 1,53,499.05 X 100 = 58.02%

2,64,580.63

5. Others Percentage = Others Assets X 100

Total Assets

= 4,812.24 X 100 = 1.82%

2,64,580.63

All the above three common size statements can be tabulated together to have a
collective view for interpretation.

Collective Common Size Statement of Revenue, Profit and Asset Allocation

Segment Revenue Profit (PBIT) Asset Allocation
(₹ in Crores) % (₹in Crores) % (₹in Crores) %
1 Viscose - Pulp and Yarn 12,209.85 12.57 1,246.27 9.21 12,873.84 4.87
2 Chemicals 7,887.88 8.12 1,203.68 8.90 7,704.95 2.91
3 Cement 52,598.83 54.16 9,307.41 68.81 85,690.55 32.39
4 Financial Services 22,094.34 22.75 1,594.64 11.79 1,53,499.05 58.02
5 Others 2,321.44 2.39 174.85 1.29 4,812.24 1.82
Total 97,112.34 100.00 13,526.85 100.00 2,64,580.63 100.00

7. INTERPRETATION
The segment ‘Cement’ and ‘Financial Services’ contribute maximum towards both
Revenue and Profit. It is interesting to note the following facts:
(i) Cement: In this segment revenue is 54.16% of total revenue but its profit share is
68.81% with an asset allocation of only 32.39% of total assets.
(ii) Financial Services: This segment has been allocated 58.02% of total assets
(maximum) and revenue is 22.75% of total revenue and it has contributed only
11.79% of total profit.
 Observation: It is clear from the above that cement segment is doing the best. It will be
better to encourage this segment show that it generates more revenue and a higher
amount of profit.

8. GRAPHIC AND DIAGRAMATIC PRESENTATION

Segment Revenue

2%
13%

23%
8% Viscose - Pulp and Yarn
Chemicals
Cement
Financial Services
Others

54%

Segment Result (PBIT)

1% 9%
12%
9%
Viscose - Pulp and Yarn
Chemicals
Cement
Financial Services
Others

69%
 Asset Allocation

2% 5%
3%

Viscose - Pulp and Yarn

Chemicals
32% Cement
Financial Services
58%
Others

Comparison of Segment Revenue and Profit

Revenue PBIT
80.00
68.81
70.00
Percentage of Total

60.00 54.16
50.00
40.00
30.00 22.75
20.00 12.57 11.79
9.21 8.12 8.90
10.00 2.39 1.29
0.00
Viscose - Pulp Chemicals Cement Financial Services Others
and Yarn
Segments

Comparison of Asset Allocation and Profit Assets PBIT

80.00 68.81
Percentage of Total

70.00 58.02
60.00
50.00
40.00 32.39
30.00
20.00 11.79
10.00 4.87 9.21 2.91
8.90
1.82 1.29
0.00
Viscose - Pulp Chemicals Cement Financial Services Others
and Yarn
Segments