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The Textile Magazine
August 2012
Grasim completes acquisition
of stake in Domsjö Fabriker
corporate
Grasim has completed the acquisi-
tion of a one-third stake in Domsjö
Fabriker (Sweden). This acquisition
marks a major milestone for its VSF
business, giving it access to quality
pulp.
Grasim’s efforts to solidly con-
solidate its pole position in the VSF
business in which it enjoys a lead-
ership status globally. Through a
greenfield project at Vilayat (Gu-
jarat) 120,000 tpa, Brownfield ex-
pansions at Grasim Harihar (Kar-
nataka). 36,500 tpa and Domsjö
Fabriker (Sweden) 45,000 tpa,
the company intends to beef up its
leadership position. These expan-
sion projects will be commissioned
during 2012-13. Collectively, these
projects will ramp up capacities by
50 per cent to an impressive 498
ktpa.
Further, a 180,000 tpa greenfield
plant in Turkey is in a planning
stage. As a country, Turkey offers
enormous potential, given its pre-
eminence as a major textile hub. A
detailed study and obtaining the req-
uisite approvals to get this project
going is underway.
In the VSF and related Chemicals
businesses, Grasim’s capex stands
at $700 million (Rs. 3,700 crores).
This is largely towards the green-
field and brownfield projects at Har-
ihar and Vilayat.
In FY11-12, the prices of VSF
and competing fibres corrected from
their peak level. In anticipation of
record crop, cotton prices declined
during the first quarter. High inven-
tory and a cautious approach adopt-
ed by the textile value chain amidst
the Euro Zone uncertainties affected
business sentiments and demand for
VSF. There were spurts in demand
to restore depleted inventory by the
downstream players in the second
half. Higher input cost and sharp ru-
pee depreciation impaired operating
margins.
Grasim operated all of its VSF
plants at full capacity (excluding
the shutdown period at its Nagda
plant for water shortage). Produc-
tion increased by five per cent with
reduced shutdown days at the Nagda
plant. Sale volumes improved mar-
ginally as compared to last year. A
sharp depreciation in rupee, rise in
energy prices and higher caustic and
sulphur prices led to substantial in-
crease in input costs. The average
pulp cost was up by 11 per cent. In-
VSF business now gains access to quality pulp
Mr. Kumar Mangalam Birla, Chairman, Grasim