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Grasim is a flagship company of the Aditya Birla Group and is today a dominant player in the
manufacturing of Viscose Staple Fibre (VSF), an extremely versatile textile fibre that has characteristics
similar to cotton. The unit was established in 1954 with production capacity of 15 TPD with Plant &
Equipment imported from Dobson & Barlow of U.K.

The plant has grown organically with current installed capacity of 415 TPD. With use of entirely
indigenous resources including raw materials, know-how and equipment Grasim has emerged as one of
the world¶s most cost-efficient VSF producers.

The manufacturing facility is located close to river Chambal at Nagda(MP), a small town exactly mid ±way
on the rail route from New Delhi to Mumbai .

The company has also established an engineering division to manufacture the plant and machinery used
for producing VSF and is a major exporter to south east and far eastern countries.

The Company is committed to innovation and creativity and has significant strengths in Research &
Development. In collaboration with the Birla Research Institute for Applied Sciences at Nagda, the
Company¶s R&D teams endeavour to make technology work. This is very important since VSF
manufacturing process is highly energy intensive and its contribution to total cost of production is approx.
12.5%. The company has it¶s own thermal plant for electricity needs.

Grasim today is a dominant player in the "

 
  ") segment and this is particularly
commendable because of its use of entirely indigenous resources including raw materials, know-how and
equipment. An innovative and research-oriented organisation, Grasim has emerged as one of the world¶s
most cost-efficient VSF producers due to its integrated operations.

Grasim is also India¶s largest producer of Sodium Sulphate ± a bye-product of VSF manufacture. This
chemical is used widely in paper & pulp, detergent, glass and textiles industries.

Pulp & Fibre Business contributes significantly to the National Exchequer by way of Excise duty and also
to India¶s foreign exchange reserves through export of Pure and Blended Yarn as well as fabrics and
Made-ups based on VSF.

 
VSF is an extremely versatile textile fibre that has characteristics similar to cotton. Next to cotton, VSF is
the best man-made fibre with durability and lustre. It can be used in blends with polyester and other
synthetic fibres. Its moisture absorption property renders it ideal for tropical countries like India.





 
Rayon grade pulp is steeped in Caustic Soda solution and excess lye is drained in slurry presses to
obtain a mat of Akali Cellulose. After shredding, Alkali Cellulose is reacted with Carbon-disulphide and
then dissolved immediately in dilute Caustic Soda solution to give Viscose which is de aerated filtered
and ripened before extrusion through spinnerettes into a spinning bath containing Sulphuric Acid, Sodium
Suphate and special additives. Cellulose is regenrated in the form of fine filaments and Sodium Sulphate
is produced with the liberation of Carbon-disulphide, part of which is recovered for reuse. The filaments
are cut into the required staple length, washed, desulphurised, bleached, soft finished and dried to obtain
Viscose Staple Fibre.

    
VSF production by the Business has recorded a production/sales growth of 7.5% CAGR over last 46
years.
The Company is committed to innovation and creative solutions and has significant strengths in Research
& Development. In collaboration with the Birla Research Institute for Applied Sciences at Nagda, the
Company¶s R&D teams endeavour to make technology work. Fruits of these efforts are manifested in
development of speciality fibres, quality improvement, lower costs, optimal use of energy and other
scarce inputs, minimal wastage and environmental conservation.

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The markets for regular and various speciality fibres were concurrently developed through a variety of
promotional steps and technical services to the value chain. Yet selling of VSF was not a problem, since
VSF was in the growth phase of its product life cycle and the cheapest amongst all textile fibres.
However, the situation changed totally after 1995 with two structural changes taking place in the Textile
Industry. The first structural change resulted in easy and cheap availability of competing textile fibres i.e.
cotton and polyester, as a result of which VSF, which used to be the cheapest of all textile fibres became
the costliest.
The second structural change took place in 1997 when polyester texturised yarn became cheaper than
polyester-viscose blended yarn.

On account of these structural changes, VSF sales, which had been growing continuously until 1997
started getting affected and now pose a major challenge for growth.

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The business comprises of:
a) Manufacturing activities at
Staple Fibre Division, Nagda, M.P.
Engineering & Development Division, Nagda, M.P.
Harihar Polyfibres ± Pulp Unit at Harihar, Karnataka
Grasilene Division ± VSF Unit at Harihar, Karnataka
Birla Cellulosic ± VSF Unit at Kharach, Gujrat

b) Research & Development activities at

Birla Research Institute for Applied Sciences, Nagda, M.P.
Grasim Forest Research Institute at Harihar, Karnataka
Technical Reasearch & Application Development Centre at Kharach, Gujarat

c) Centralised Marketing activities at

Marketing Head Office, Mumbai, for VSF.
Staple Fibre Division, Nagda for Sodium Sulphate

d) Business Cell at
Nagda for consolidation of all business activities.

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   '())*+),
1 Installed Capacity Tonne 151,475
2 Production Volume Tonne 77,547
Grey 53,564
Dyed
3 Turnover Volume Tonne 83,907
Grey 55,158
Dyed
4 No. of M/c (Mfg. Lines) No. 11
5 Power Plant Capacity MW 103
6 No. of Employees No. 3003
 7 Turnover Value ± GrossRs. Crores1253
8 PBDIT Rs. Crores294

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i) Manufacturing
‡ How to produce international quality VSF from indigenous Pulp and old
manufacturing plants.
‡ How to cater to changing customer requirements for a multitude of product
specifications

ii) Environmental issues

‡ Detailed Study and Specific Action Plan, if any, arising out of latest Gazette
Notifications

iii) Marketing
‡ Volume : How to enlarge existing markets, which are stagnant and develop new
usage/applications.
‡ Pricing realisation: How to take care of substitution dynamics on account of
competing fibres having become substantially cheaper.

iv) Global positioning

How to penetrate the stagnant global markets and take advantage of the
restructuring taking place in the Industry to grow the business.
How to develop Lyocell Technology for commercial adoption.

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 ())/ ())*
1 No. of Employees
2 Regular 3622 3301
3 Contractor¶s 1802 1987

 +-
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 ())/ ())*
1 Man-hours worked
2 Regular 7164409 6563304
3 Contractor¶s 3991800 4252640

Discuss the various aspects of this project from the following angles:

1) Why this product would have been chosen by it¶s promoter the great industrialist and
visionary, Late Mr G.D. Birla

2) What could have made him choose an obscure town like ³Nagda´ as the location

3) What impediments the company must have faced in setting up the unit
4) What elements must have been considered in the cost of project

5) What would have been the pattern of ³Means of Finance´

6) How was the plant imported and what mode of finance must have been used

7) Which raw materials are required by the plant and from where they are procured

8) What could have been the constraints in implementing the project.

9) What are the critical requirements of this project

10) Do you think any vertical integration exists in the project

11) What could have been the merits/demerits to the society from the projects

12) Present a SWOT analysis of this project.