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The Textile Magazine
August 2012
crease in input costs resulted in low-
er PBIDT and operating margins.
The performance of pulp JVs was
impacted due to the increase in en-
ergy cost coupled with softening of
pulp prices. Difficult market condi-
tions affected the performance of
the fibre JV Birla Jingwei in China.
The VSF greenfield projects at
Vilayat (120,000 tpa), Gujarat, and
the brownfield expansion (36,500
tpa) at Harihar, Karnataka, are on
track. The Vilayat project is slated
for commissioning towards the end
of FY12-13. The Harihar project
is expected to be commissioned in
two phases during the current year.
A capital outlay of Rs. 2,700 crores
has been earmarked on the above
projects.
An additional water reservoir is
being constructed at Nagda to cre-
ate higher water storage capacity to
meet the water requirements dur-
ing summers (pre-monsoon period).
This will help in ensuring continu-
ous plant operations at Nagda and
avoid plant shutdown due to water
shortage.
The demand for textiles will con-
tinue to expand as growing popu-
lation and rising prosperity in the
emerging markets will fuel con-
sumption. With limited availability
of arable land for cotton due to com-
petition with other cash crops, VSF
demand is expected to grow reason-
ably well in the long term.
In the short run, the market con-
dition may remain volatile. New
capacities in China may create pres-
sure on markets. Stability in the
Euro Zone and macro-economic
policies will be the key factors influ-
encing demand. Profitability will be
governed largely by the dynamics of
competing fibres, input and energy
costs.
Business outlook
The focus of the company contin-
ues to be on specialty fibres. Its plan
to produce specialty fibre at Vilayat
will lead to market enlargement.
The business will increase its efforts
towards building a strong R&D,
which will enable it to launch new
product offerings. With the availa-
bility of increased volumes post ex-
pansion, VSF business will be able
to achieve accelerated growth and
increase its market share globally.
To expand global footprint, plans
are on anvil to set up a greenfield
VSF plant in Turkey. To this end,
Grasim has invested one-third of
the initial capital of ABES for ac-
quiring land and meeting initial ex-
penses during the year. ABES is in
the process of undertaking a detailed
study and subsequently seeking the
necessary approvals.
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