“The acquisition of the Terrace Bay Mill, in Ontario, Canada, by AV Terrace Bay, Canada, the pulp JV, with Grasim holding a 40% stake and the remaining 60% held by Thai Rayon Public Company Ltd., Thailand, was a major strategic move during the year. The mill is in the process of being converted into a dissolving grade pulp mill. In the viscose staple fibre (VSF) business, we enjoy global leadership. To sustain the ongoing growth, we have an integrated business model, spanning the entire value chain from plantation to pulp to fibre. The Terrace Bay mill, upon conversion, will be geared to provide superior quality pulp for our VSF plants”, says Mr. Kumar Mangalam Birla, Chairman, Grasim Industries Ltd., an Aditya Birla Group Company.
Started in 1948 as a textile manufacturer Grasim Industries, later diversified into viscose staple fibre, cement, sponge iron and chemicals. Headquartered in Nagda, Madhya Pradesh, the company has another plant at Kharach (Kosamba, Gujarat).
Grasim is the world’s second largest producer of viscose rayon fiber with about 21 per cent market share. Its textile and related products contribute to 15 per cent of the group turnover. For the financial year 2012-13, the company’s consolidated revenues showed a growth of 11 per cent at Rs. 27,904 crores compared to Rs. 25,245 crores the previous year. It clocked a net profit of Rs. 2,704 crores, inclusive of Rs. 204 crores accrued through selling off its unrelated investments. Net profit for the previous year was Rs. 2,647 crores.
Given the prevailing global economic conditions, coupled with the surplus capacity in China, the VSF industry continues to face a challenging environment in the immediate term. Capacity expansions in VSF and cement will provide additional volumes, driving growth and further consolidate the company’s leadership. This will enable it to move forward rapidly, with the recovery in the market. The company will also continue to focus on cost reduction measures, improve asset productivity and expand its specialty products portfolio.
Global demand for VSF has been growing at eight per cent CAGR (CY 07 – CY 11) driven by growing prosperity in the emerging economies. In order to meet the growing demand and retain its leadership in the sector, the company proposes to expand its capacity from 334K tpa to 498K tpa. Its brownfield expansion at Harihar, Karnataka, with a capacity of 36k tpa has been completed with the commissioning of phase-II going in May last. The VSF greenfield plant at Vilayat, Gujarat, with a capacity of 120K tpa, is expected to be commissioned in the second quarter of FY 2013-14. This will enable Grasim Industries to increase its presence in specialty fibres as the Vilayat plant will also produce new generation modal and micro modal, besides dyed fibres.
Mr. Kumar Mangalam Birla says: “We will be able to consolidate our leadership position in VSF, backed by our robust capex plans. Their prospects are indeed encouraging in the long term. In the short term, given the prevailing global economic conditions, coupled with surplus capacity in China, the VSF industry will be under pressure.”
Grasim is in the process of revamping its VSF plant at Nagda for technological upgradation, to achieve higher efficiency and global quality. Extensive new capabilities for pulp R&D in the manufacturing facility, strengthens the existing infrastructure for development. The Wood and Pulp Research Centre at Harihar has been strengthened, and is contributing to better tree stocks for local wood supplies.
The company has been utilising the contributions of the Birla Research Institute for Applied Sciences (for fibres) at Nagda and the Textile Research and Application Development Centre (TRADC) at Kharach to its new processes and products development, and expanded applications for fibres.