Company Profile: Grasim Industries Ltd.

Excerpt: Grasim Industries Limited is the flagship company of the Aditya Birla Group. It started as a textiles manufacturer in India in 1947

Grasim Industries Limited is the flagship company of the Aditya Birla Group. It started as a textiles manufacturer in India in 1947. Today, it is a leading global player in Viscose Staple Fibre (VSF), the largest chemicals (chlor-alkalis), largest cement producer and diversified financial services (NBFC, Asset Management and Life Insurance) player in India.

The Aditya Birla Group is a leading global player in VSF, accounting for ~17 per cent of global production. Over the years, the company has strengthened backward integration in dissolving grade pulp, caustic soda, power and steam — major inputs required for the production of VSF.

The Chemical business was set up given it’s a critical input for manufacturing VSF, and to achieve backward integration. In the last few years, the Caustic Soda business has grown multi-fold through both organic and inorganic routes. Grasim is the largest caustic soda producer in India with a capacity of 840 KTPA [with the merger of Aditya Birla Chemicals India Ltd (ABCIL) in FY 2016, capacity has increased from 452K TPA to 840K TPA.)

The Cement business was started in 1985 with a capacity of 0.5 MTPA. Grasim’s subsidiary UltraTech Cement Limited is a leading global cement manufacturer with a capacity of 93 MTPA in India (includes 4 MTPA overseas). The company has added 47 MTPA organically and 42 MTPA inorganically since its inception. In June 2017, UltraTech completed the acquisition of cement plants from Jaiprakash Associates Ltd and Jaypee Cement Corporation Ltd with a total capacity of 21.2 MTPA. Post this acquisition, the total domestic capacity increased to 89 MTPA thus taking its total capacity to 93 MTPA.

Aditya Birla Nuvo Ltd, an Aditya Birla Group company was merged with Grasim w.e.f. 01 July 2017. Subsequently, the Financial Services business was demerged from the merged entity and was listed on bourses as Aditya Birla Capital Limited on 01 September 2017.


The Company entered into the Chemicals business to manufacture Caustic Soda, an input for VSF. The business has grown multi-fold and today Grasim is the largest caustic soda producer in India. It also produces a range of chlorine derivative products and epoxy.

At Vilayat complex, Grasim has setup a 1,23,097 MTPA capacity plant of Epoxy. The business offers entire range of epoxy products to customers from basic products like liquid epoxy resins to value added products like formulated resins, reactive diluents and hardeners. Epoxy has wide range of applications including civil coatings, composites (Wind Energy Blades), adhesives, paint, electrical and electronic industry and can coating.

With the merger of Aditya Birla Chemicals India Ltd. (ABCIL) in FY 2016 and after debottlenecking, the caustic soda capacity has increased from 452K TPA to 840K TPA. The merger has enabled the geographical diversification for Grasim across the country, besides bringing in operational and financial synergies.

Chlorine Derivatives

The business uses cost-effective membrane cell technology and is largely self-sufficient in power. For gainful utilisation of chlorine, the business has portfolio of Chlorine Derivative like Stable Bleaching Powder (SBP), Polyaluminium Chloride (PAC), Chlorosulphonic Acid (CSA), Chlorinated Paraffin Wax (CPW), Calcium Chloride (CaCl) and Aluminium Chloride (AlCl), with a total capacity of 243K tonnes.

Anhydrous aluminium chloride

Anhydrous aluminium chloride is the principal catalyst used in the Friedel-Crafts reaction, both acylations and alkylations. The product also finds application in the manufacture of Ibuprofen and other bulk drugs, ethyl benzene, isopropyl benzene, titanium dioxide, hydrocarbon resins, terpene resins and polybutenes.

The Friedel-Crafts reactions are used, for example, in the preparation of anthraquinone for the dyestuffs industry (phthalo-cyanine blues and greens) from benzene and phosgene.

Chlorinated paraffin formulations

Chlorinated paraffin formulations are used in a wide range of industrial applications including flame retardants and plasticisers. The product functions as an additive in metal working fluids, sealants, paints and coatings. The manufacturing processes include strict quality control measures and are certified under ISO:9001, OHSAS:18001 and SA:8000 by BSI.

Chlorosulphonic acid

Chlorosulphonic acid is primarily used to produce sulphates, sulphonates, sulphonyl chlorides with organic compounds like hydrocarbons, alcohols, phenols, amines.

Polyaluminium chloride (PAC)

Polyaluminium chloride (PAC) is manufactured in both liquid and powder form. The product is used in deodorants and antiperspirants, as a flocculant in water purification, in treatment of drinking / potable water, wastewater treatment and paper sizing.

Stable bleaching powder

Stable bleaching powder is marketed under three brand names – Vikram, Shaktiman and Lion. It is used as a disinfectant in water treatment and also in the textiles, pulp and paper, and carpet industries.

Calcium chloride

Calcium chloride is used extensively in oil industry, for treating roads in winter and in cement paint manufacturing.

Company manufactures high and consistent quality calcium chloride granules with minimum 94 per cent purity. The granular form helps customer by reducing handling trouble.

Capacities at a Glance

Chlorine Integration

Company has global leadership in Aluminum chloride and SBP and local leadership in CP and PAC. Company exports its products to over 50 countries worldwide. Calcium hypo, epichlorohydrine, chloromethanes and 4 to 6 other products are among the new molecules being evaluated by the company. Company also has alliances and partnerships for long term supply of chlorine and hydrochloric acid through pipeline.

Visccose Staple Fibre

VSF Grasim is India's pioneer in VSF, a man-made, biodegradable fibre with characteristics akin to cotton. A versatile and easily blendable fibre, VSF is used in apparel, home textiles, dress material, knitted wear and non-woven applications. Grasim offers the entire range of cellulose fibre under the umbrella brand 'Birla Cellulose'. Our fibres can be used in their original form, or can be blended with all natural and synthetic fibres for enhanced comfort, feel and lustre.

Production of Viscose Staple Fibre (VSF) was started in 1954 at Nagda, in Madhya Pradesh. The business has grown steadily over six decades to become a leading player, with 9% global share. At Group level, The Aditya Birla Group commands 17% share globally. The Pulp & Fibre Business derives its competitive edge from its integrated business model, with captive raw materials - dissolving grade wood pulp, caustic soda, carbon-disulphide, power generation and steam.

VSF Capacities at a Glance

VSF is the fastest growing fibre. Indian demand growth at 8% higher than the global demand growth driven by business development efforts of the company.

VSF: Backward Integration

High backward integration in VSF encompassing over 80% of costs provides the company significant competitive advantage over non integrated players.

Business Performance

Pulp & Fibre Business: Viscose Staple Fibre (VSF) Business has continued its focus on expanding the usage and applications of VSF in the domestic market through Liva initiative. The “Liva” brand for Company’s VSF based products, launched in 2014-15 has been well established in the textile value chain and is creating a huge pull for viscose fibre in the market. The reach of Liva has expanded manifolds, starting with 16 brands & 2.1 million Liva tagged garments in Autumn-Winter to 15 to 34 brands & 12.8 million Liva tagged garments in Spring-Summer 17. This has led to double digit growth in VSF demand in India, VSF business has recently launched brand Liva Crème, a premium variant of Liva to move up the value ladder. On overall basis, the business has recorded a volume growth of 6% during the year and EBIDTA growth of 56% from 923 Crore in FY 2015-16 to 1,439 Crore in the FY 2016-17, on the back of better realizations in line with global prices, improved operating efficiencies and higher specialty share in the product mix. The business team is actively working on cost effective debottlenecking of VSF capacity which is expected to provide additional volume of approx. 60,000 Ton per annum going forward.

Pulp & Fibre JVs: The overseas Pulp & Fibre Joint Ventures of your Company have recorded all round improvement performance during the year. Especially, the performance of Birla Jingwei Fibre Co. Ltd., China has been outstanding. Share of your Company in the profit of Birla Jingwei Fibre Co. Ltd. has grown significantly from 1.2 Crore last year to 35.6 Crore this year. On overall basis, the Company’s share in Profit after Tax of the operating Pulp & Fibre JV’s has increased from 45 Crore in last year to 135 Crore during the year.

Chemical Business: Chlor Alkali sector witnessed subdued demand growth during the year as the Caustic Soda as well as Chlorine consuming industries were impacted by high value currency note replacement programme of the Government. The business has recorded a volume growth of 2% during the year. Epoxy Resins, a product of your Company is now well accepted by the user industries and it has recorded a volume growth of 24%. Similarly, chlorine value added products have also recorded a volume growth of 15%. Focus on cost reduction initiatives coupled with volume growth and high realization have resulted into 13% increase in EBITDA from 747 Crore (on like to like basis) last year to 842 Crore during the year. The capacity expansion plans at different plants are progressing well and by end of the current financial year, capacity of Caustic Soda will cross 1 MTPA , the largest in India and among top 3 in Asia. The business team is continuing its focus on expanding the markets for Chlorine value added products.

Cement Business (UltraTech): In the first half of the year, the cement industry saw moderate growth. Subsequently, sluggish demand from the housing segment coupled with the absence of private sector capital expenditure, impacted cement demand.

Business Outlook

Caustic Soda capacity expansion of 208K TPA through brownfield expansion at Vilayat (Gujarat) and de-bottlenecking at Karwar (Karnataka) and Ganjam (Odisha) is on track. The Company’s total caustic capacity post expansion will be 1,048K TPA by FY18. Steady growth of chlorine derivative products eased the pressure on chlorine offtake to a great extent. The chlorine derivatives business also provides good growth opportunity in the exports market. Business achieved significant progress in areas of water treatment chemicals, plasticisers and other industrial products. Going forward, your Company will continue to focus on expanding the portfolio of chlorine derivative products. Phosphoric Acid plant of ~29K TPA is being set up at Vilayat (Gujarat) which is likely to be commissioned in Q3 FY18. Post this commissioning, total capacity of Phosphoric Acid will increase to ~53K TPA, which will help in increased captive consumption of Chlorine. The business strives to improve profitability by taking energy conservation measures and higher captive use of Chlorine.

Approach to Sustainability

Grasim has Responsible Wood Sourcing Policy. 60% of the wood is certified by FSC. Company does not purchase wood harvested from high conservation, value/illegal forests.

Company promotes the use of renewable sources. 80 to 90% of the energy requirements in the pulp units are renewable sources like bark and black liquor.

Reduction in water consumption. New techniques have been developed leading to 30 liters of water saving for every meter of fiber.

Sustainable Logistics. Reduced energy consumption and GHG emissions for transportation off rawmaterials and products and also to improve transport safety.

Financial Performance

Company recorded Standalone Revenue of Rs. 11,253 Crore, 15% higher from Rs. 9,778 Crore in the previous year. Net Profit for the year at Rs. 1,560 Crore, increased by 60.71 % from Rs. 971 Crore in the previous year. With improved performance of all the three businesses, EBIDTA grew by 18% to Rs. 8,333 Crore from Rs. 7,066 Crore in the previous year. Your Company’s Consolidated Revenue increased to Rs. 40,247 Crore from Rs. 38,535 Crore in the previous year. Net Profit increased to Rs. 3,167 Crore from Rs. 2,468 Crore in the previous year.

Globally, the demand for Viscose Staple Fibre (VSF) has been growing at a faster rate as compared to other fibres, and is expected to continue to grow at healthy pace. In India, high value currency replacement programme temporarily impacted downstream players in textile value chain. Thus, the demand for VSF witnessed a slowdown, particularly from power loom sector. However, Company was able to do higher export sales of VSF to mitigate the slowdown in domestic off take. Sales volume of the Company increased by 6%, led by higher share of speciality fibre, which increased from 33% in FY 16 to 36% in FY 17. Improved productivity at various plants led to reduction in consumption of power, steam and caustic soda. Higher realisation and improvement in operating efficiencies resulted in surge in EBITDA, which went up by 56% from Rs. 923 Crore to Rs. 1,439 Crore, negated to some extent by increase in pulp cost. EBITDA margin was 20% in the current financial year as against 15% in the last financial year. Sustainability is the key focus area for the Company. Significant reduction of more than 20% in water consumption was achieved by Quarter 4 compared to average consumption of FY 16.

The Company’s Liva brand for VSF-based products is making strong foothold in women’s wear market. Liva Crème, a premium version of brand Liva, was launched during the year, to cater to the niche market. It has established strong market presence with leading customers, and is helping expand market for speciality fibre in India. The joint venture companies (JVs) engaged in Pulp and Fibre business, reported considerable improvement in financial performance. As against a PAT (Grasim’s share) of Rs. 63 Crore in FY 16, these JVs have contributed a PAT of Rs. 138 Crore during the current year. Higher pulp realization and volumes coupled with improvement in consumption norms of various inputs led to rise in operating profit.

Chemical business reported an increase of 11% in sales revenue and EBITDA increased by 13% over the previous year. Capacity utilisation was high at 93%. Sales volume was up by 2%. The impact of higher energy cost was offset by reduction in power consumption and decline in salt and other raw material cost. Steady growth of chlorine derivative products eased the pressure on chlorine offtake to a great extent. The chlorine derivatives business also provides good growth opportunity in the exports market. Business achieved significant progress in the areas of water treatment chemicals, plasticisers and other industrial products.

In Cement business, UltraTech Cement Limited (UltraTech), a subsidiary of your Company, has completed the acquisition of the cement plants of Jaiprakash Associate Ltd. and Jaiprakash Cement Corporation Ltd., located in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, with a total capacity of 21.20 MTPA at an enterprise value of Rs.16,189 Crore, in June 2017. During the year under review, cement capacity was augmented to 66.25 MTPA, following the commissioning of the grinding unit at Patliputra in Bihar. Cement production improved marginally from 47.56 MTPA in the previous to 47.91 MTPA. Capacity utilisation clocked 72% on a higher capacity base. Domestic sales volume rose marginally from 47.13 MMT to 47.62 MMT vis-à-vis a marginal dip in industry volume for the year.

Risks and Concerns

Risk Management is a very critical aspect in the current economic environment. The objective of Risk Management System is to identify, monitor and take mitigation measures on a timely basis in respect of the events that may pose risks for the businesses. Grasim has a robust Enterprise Risk Management framework in place. Risk Management Committees have been formed at each Business unit and Corporate office for effective and timely identification and monitoring of risks and implementation of mitigation plans. Risk Management Committee of the Board reviews the identified risks and mitigation plans from time to time.

Company has identified the following risks:


  1. Grasim Industries should focus on increasing branding activities, this can result into higher sales.
  2. Aditya Birla Group has a huge brand equity attached with it, being a part of such a group is something the company should take leverage of and build its operations around
  3. It can expand its operations to other countries
  4. With increase in construction activities, demand for cement is rising, this a huge opportunity for Grasim Industries to push their products.


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