HEADLINES:
August 18 2018
Grasim aims at leadership in viscose
25 May 2018

Aditya Birla Group firm is expanding viscose staple fibre capacity by 2.4 times at a cost of ₹4,257 crore

Aditya Birla Group firm Grasim Industries, one of India’s largest viscose staple fibre (VSF) producers, is expanding its capacity by 2.4 times to make 788 kilotonnes per annum (ktpa) of VSF by 2021 at cost of ₹4,257 crore and market it as the most sustainable fibre compared to polyester or cotton.

“Viscose is the most sustainable fibre,” Sushil Agarwal, director, Grasim and Group CFO, told The Hindu.

Polluting products

“Making one cotton T-shirt takes 2,600 litres of water, 99 gram of fertiliser and 4.5 gram of pesticide while polyester t-shirt is the polluter as its biodegradability is 200 years and human toxicity is very high,” he added.

VSF’s global demand has been growing at a CAGR of 6% compared with cotton’s 1% and polyester staple fibre’s (PSF) 2%, making Grasim invest in the VSF business. Grasim is the world’s fourth largest pulp producer with a VSF plant in China.

“In India, the demand growth for VSF at 8% is higher than global demand growth, driven by business development efforts of Grasim,” Dilip Gaur, MD, Grasim, said in an interview.

“The demand share as a percentage of total fibre demand for VSF is projected to grow to over 6% by 2022 compared to 4.75% in 2012,” he added. “The demand share as a percentage of total fibre demand for cotton is likely to go down to 23.86% by 2022 compared to 27.47% in 2012.”

Cost control

Grasim has ensured control over 80% of the costs through backward integration, giving it a significant competitive advantage over non –integrated players.

“Our manufacturing input of caustic soda, power and steam and carbon disulfide are fully captive and we have control over 60% of the pulp requirements,” said Mr. Agarwal.

The company, after the successful introduction of its fabric brand Liva in 2015 in the Indian market, is planning to take the brand international. Liva helped Grasim lift its domestic sales volume to 3,69,480 metric tonnes (mt) in FY18 compared with 3,12,238 mt in FY16 as Liva’s outlets grew 18 times from 2,035 to 37,420 during the period.

“We are planning to take Liva to Indonesia next, followed by Turkey,” said Mr. Gaur. “We already have a design studio in New York. We are tying up with international designers to promote Liva as fabric of choice,” he added.

The company plans to spend ₹4,257 crore of the ₹13,327 crore of capital expenditure towards brownfield expansion and debottlenecking of VSF plants.

 

 

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