30 March 2007

Aditya Birla Group plans VSF expansion globally

• Brownfield expansions to notch up capacities by one third in next one year from 566 ktpa to 727 ktpa
• New greenfield plant at a strategic location to cater to VSF demand in the Middle East and Latin American markets

The Aditya Birla Group has embarked on an ambitious expansion plan for its Viscose Staple Fibre (VSF) business across geographies. VSF is a core business for the Aditya Birla Group. After a ramp-up of 120 ktpa in the recent past, the present capacity of 566 ktpa represents a 23 per cent global market share in this sector.

The Aditya Birla Group's VSF manufacturing plants straddle Thailand, Indonesia, India and China. At each of these locations, further capacity expansions are under way — in Thailand by 31 ktpa; in Indonesia by 37 ktpa; in India by 64 ktpa and in China by 30 ktpa. These brownfield expansions, slated to be completed by the second quarter of 2008, will further notch up the Group's VSF production from 566 ktpa to 727 ktpa and entail an investment close to US$ 260 million.

Says Mr. Shailendra K. Jain, the Director responsible for the global pulp and fibre business, "Our growth, going forward, will be through all options. Over the years we have been moving away from being a pure commodity player to a value-added player for the niche segments of the market. In addition to spun dyed fibres, we have significantly enhanced our speciality fibre portfolio covering all generations of man-made cellulosic fibres. Our intent is to be an equally significant producer of fibres for non-woven applications. These brownfield expansions in Thailand, Indonesia, China and India have been engineered for the production of speciality fibres for the higher end of the market and also for the production of fibres for the fast-growing non-wovens segment."

While the brownfield expansions are intended to meet the growing demand of VSF in emerging textile hubs of Asia, the Group has also initiated steps for setting up of a 90 ktpa greenfield capacity in the Mediterranean region that offers significant cost and logistics advantages to the Group's existing VSF operations. "This new facility with a focus on high-end products will enlarge our global footprint and help meet the requirements of customers in emerging textile hubs of the Middle East, Mediterranean region and Latin American countries in a cost effective way," avers Mr. Jain. It will also enable customers to proactively grapple with the challenge of increased textile imports from China post WTO.

Importantly, the Group has beefed up its existing R&D facilities for cellulosic fibres through the setting up of a state-of-the-art Textiles Research and Application Development Centre in Gujarat, India. The centre aims to provide R&D support at all stages of the textile value chain right from fibre to garments under one roof.

The Group's VSF business operates through its three companies — Grasim Industries in India, Thai Rayon Corporation in Thailand and Indo Bharat Rayon in Indonesia, which also oversees its Chinese operations at Birla Jingwei Fibres, China. The Group has also concurrently expanded its presence in dissolving grade pulp production to support the raw material requirement of its VSF operations. The Group has two pulp plants in Canada and one in India. It has initiated a pulp and plantation project in Laos to strengthen its backward integration.

The Group's pulp and fibre business is on top of the league in the VSF sector globally, factoring an aggregate view of its financials, margins, geographical spread, horizontal and vertical integration, product mix and market presence.

The Aditya Birla Group is a US$ 12 billion conglomerate with a market cap in excess of US$ 20 billion. It is anchored by an extraordinary force of 88,000 employees belonging to 20 different nationalities. Over 23 per cent of its revenues flow from its operations across the world. The Aditya Birla Group's products and services offer distinctive customer solutions worldwide. The Group has operations in India, Thailand, Indonesia, Philippines, Egypt, China, Canada, Australia, USA, U.K., Germany and Hungary.