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Grasim Industries, the flagship company of Aditya Birla Group, on Thursday reported a 66% fall in its consolidated net profit at Rs 390 crore in the second quarter, compared with Rs 1,164 crore in the last year quarter.Revenue from operations, meanwhile, rose 11% YoY to Rs 33,563 crore in the reporting period.EBITDA for the quarter dropped 10% YoY to Rs 4042 crore in the reporting quarter.The operating profit declined as a result of lower profitability in the Cement business and initial investments in the Paints business under brand ‘Birla Opus’."The results are in line with our plan to build a strong consumer-facing business. Further, higher interest and depreciation charges on account of investments in the Building Materials and Renewables businesses has led to lower PAT," Grasim said in a filing.The CSF business achieved its highest ever quarterly sales volume at 219 KT up 4% YoY led by stable domestic demand. EBITDA Margins improved on the back of higher sales volume and improving trend in global prices. Volume growth in CFY business was driven by festive demand, however realisation remains under pressure due to Chinese producers’ aggressive pricing for the Indian markets. Cellulosic Fibres segment reported revenue of Rs 4,125 crore and EBITDA of Rs 494 crore, marking a YoY increase of 6% each.The Chemicals business revenue rose 3% YoY to Rs 2,054 crore.. Caustic soda sales volume was down by 4% YoY due to lower production on account of maintenance shutdown of the captive power plant at Vilayat. EBITDA for the Chemicals segment increased 16% YoY to Rs 273 crore, driven by higher profitability in Chlorine Derivatives and Specialty Chemicals businesses.Building Materials segment reported revenues of Rs 16,683 crore, showing a growth 3% YoY led by Paints and B2B E-Commerce businesses. EBITDA was down 28% YoY to Rs 1,886 crore for the quarter, mainly due to lower realisations in cement business and initial investments in building a consumer facing brand ‘Birla Opus’ in the Indian decorative paints market.Consolidated sales volumes of the Cement business (UltraTech) were up by 4% YoY to 27.84 MT and ready-mix concrete sales volumes grew by 19% YoY to 3.01 Mn. UltraTech Building Solutions (UBS) outlets increased to 4,236, contributing 19.4% of total sales.On Thursday, Grasim shares closed 1.25% higher at Rs 2,534 on NSE.

Listed companies in India paid royalty to related parties (RPs) in excess of 20% of their net profits once out of four times, according to a study conducted by Securities and Exchange Board of India (Sebi). Moreover, the market watchdog's analysis finds that one out of two times, the listed companies that paid royalty, did not pay a dividend or paid more royalty to RPs than the dividend paid to non-RP shareholders.The study is based on annual, company level information, in respect of 233 listed companies across sectors in India. These companies have made royalty payments, amounting to less than 5% of turnover to their RPs, during the 10-year period from FY 2013-14 to FY 2022-23.Among other findings, it was revealed that during the period, there were 1,538 instances of royalty payments within 5% of turnover of the company (i.e., not requiring majority of minority shareholder approval) by 233 listed companies.Of these, 1,353 instances of royalty payments were by listed companies that made net profits and 185 instances of royalty payments were by companies that made net losses.During FY 2014-23, there were 185 instances of royalty payments by 63 companies that made net losses. Such companies made royalty payments of Rs 1,355 crore to their RPs. In this, 10 companies incurred net losses at least for five years while paying royalty amounting to Rs 228 crore to their RPs.Consistent royalty payersThe study mentions 79 companies which consistently paid royalty to their RPs during all the 10 years under study. While aggregate royalty payment by these companies kept pace with growth in turnover and net profits till FY19, royalty payments tempered post FY19.In the case of 18 companies, royalty payments outpaced both turnover and net profits throughout the period. Aggregate royalty payments by these companies grew at a CAGR of 14.6% over the 10 years, which is more than double the CAGR of turnover (6.5%) and net profits (6%) of these companies.In this, 11 out of 79 companies consistently paid royalty exceeding 20% of net profits during all the 10 years.Issues flagged by proxy advisory firms on royalty related matters:1) Royalty payments by companies have little correlation to their revenue or profits.2) The performance of royalty-paying companies is not of a higher order compared to their peers, including those who are not paying royalty.3) Companies, at times, seek approval for royalty payments in perpetuity, contrary to the principles of corporate governance.4) Companies often make significant payments towards brand usage, despite these companies themselves spending considerably on advertisement, brand promotion and creating/adding value to the parent brand.5) Poor disclosure levels continue to keep a veil on royalty and related payments. Listed companies do not provide adequate justification or rationale for royalty payments, and details of benefits derived in return for such royalty paid.6) In the case of MNCs, shareholders of the Indian subsidiary have little information on the rates of royalty being charged from fellow subsidiaries in other geographies.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)