Grasim, a part of the Aditya Birla Group, is planning to setup a viscose staple fibre plant (VSF) in China. The setup was planned, following the increasing demand of the fibre in the Chinese market amidst shutting down of their Nagda plant due to scarcity of water in Madhya Pradesh. The Grasim Group which controls about 25 per cent of the global VSF market will mainly be pitted against domestic major Nanjing Chemicals in China.
This is not the first time the company is facing problems like these, the Group’s Harihar and Nagda plants were shut down for 45 days and 75 days, respectively during the last financial year as well, followed by similar problems. The plant this year is supposed to commence its operations and resume normal production as soon as there were adequate rains in the catchment areas. The closed Nagda plant is the producer of a wide range of the staple fibre, matching the customer requirements in terms of length, denier and colour and is also the largest producer of spun-dyed specialty fibre in the world.
But water scarcity is not the only problem being faced by the group’s VSF business. The Group is also facing challenges on the raw material front. Prices of the raw materials used in VSF have also been increasing. While the pulp prices have seen a rise of 11 per cent, the prices of caustic soda and sulphur have gone up by 22 per cent and 33 per cent, respectively.
In the meanwhile, Grasim Industries has acquired Canada’s Terrace Bay Pulp for about US $ 300 million. Terrace Bay which owns 2,85,000 tonnes of paper grade pulp capacity, will be converted into rayon grade pulp to be used by Grasim for its viscose staple fibre operations. The Terrace Bay Pulp mill, owned by Buchanan Forest Products, has been shut for the past two months.
