List of Contents

CONTENTS1.Abstract....................................................................................................................................................................................... 3

2.Viscose Staple Fiber...............................................................................................................................................................5

2.1.Meaning of Viscose Staple Fibers..............................................................................................................................6

2.2.Properties.............................................................................................................................................................................7

2.3.Process................................................................................................................................................................................. 8

2.4..Historical View............................................................................................................................................................. 10

3.Indian VSF industry...........................................................................................................................................................13

3.1 Introduction..................................................................................................................................................................... 13

3.2.EXPORTS........................................................................................................................................................................ 14

3.3.Industry Entry Barriers................................................................................................................................................15

3.4.CAPACITY..................................................................................................................................................................... 16

3.5.VSF Domestic Demand...............................................................................................................................................17

3.6.TRENDS IN USAGE...................................................................................................................................................18

3.7.ISSUES OF VISCOSE INDUSTRY IN INDIA.................................................................................................19

3.8.ALTERNATE RAW MATERIALS.......................................................................................................................20

3.9.Viscose fiber industry technology development direction..............................................................................21

3.10.Price................................................................................................................................................................................. 22

3.11.Key enterprises.............................................................................................................................................................23

4.Grasim Aditya Birla Group............................................................................................................................................24

4.1.Introduction................................................................................................................................................................... 24

4.2.Grasim VSF Global presence....................................................................................................................................26

4.3.Quarterly Analysis OF Grasim.................................................................................................................................27

4.4.Grasim in India...............................................................................................................................................................28

4.5Grasim Joint Ventures (JV).........................................................................................................................................29

4.6.Research and development of Grasim....................................................................................................................33

5.Viscose Staple Fiber Products........................................................................................................................................37

6.Future of VSF........................................................................................................................................................................ 38

7. Conclusion..............................................................................................................................................................................42

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7. Bibliography..........................................................................................................................................................................43

8.ACKNOWLEDGEMENT............................................................................................................................................... 44

3

1.ABSTRACT The first ten years of the 21st century have witnessed a resurgence in the global viscose fibre industry as production has continued to increase, following a trend first evident in only some regions of the world during the latter part of the 1900s.

In the late 20th century however, the regional upward trend, which was driven by the developing industry in Asia, was masked by the more sig-nificant and frequent closure of older, less environmentally friendly plants in the western world, particularly in Eastern Europe. Now, at the end of the first decade in the 21st century with that programme of plant closures effectively finished, the previously obscured underlying trend has become clear (Figure 1). The net result of the two opposing trends in Asia and East Europe towards the end of the 20th century was an overall net decrease in global manufacturing capacity of around 600 kt, to ap-proximately 2.0 million tones by the year 2000. During this time, more than 800 kt of capacity was lost in Eastern Europe with a further 300 kt closing in West Europe and other smaller losses recorded in Japan and North America. However, at the same time capacity in China was in-creasing by more than 400 kt with a similar increase occurring in South and Southeast Asia. So, whilst the global headline figure was suggesting a decline in capacity with all the connotations of an industry in terminal decline and the associated negative public perception, a closer examina-tion of the situation revealed an industry which far from dying was in re-ality growing significantly, particularly in Asia. By the end of the first decade of the 21st century, closures of viscose staple plants had slowed almost to zero and the underlying growth pattern had becomemuch clearer. In fact, during the first ten years of the 21st century global viscose staple capacity increased by around 1.5 million tones (an aver-age of 7.7 % per annum) to more than 3.5 million tones, an all time record high. At the same time, production of viscose staple also in-creased, albeit at the more modest average pace, of 6.7 % per annum. Increased capacity in the industry was driven by the strengthening global demand for viscose staple, not only in textile

4

applications concentrated mostly in Asia, but also in the more technical demanding and fast expanding nonwovens industry concentrated in the West where viscose staple is the preferred fiber in many applications in-cluding wet wipes, hygiene products and surgical applications. Thus, long gone is the once popular perception that viscose staple is a cheap filler fiber to be found only in budget priced apparel. It is now in de-mand for the positive contribution it makes to the finished product whether that be in the more traditional textile industry or in nonwoven applications. Indeed, the old textile mills of Eastern Europe which tradi-tionallyproduced large quantities of low grade textile materials mainly for do-mestic consumption have long since given way to the new highly auto-mated and in many cases vertically integrated textileconglomerates located chiefly in Asia. It is no surprise therefore that high grade fibre making capacity has migrated to those markets where the textile industry has been growing fastest.Whilst the rapid increase in capacity has been taking place in Asia, vis-cose staple producers in the West have taken stock and become stronger and better able to cope with competition from the newer low cost pro-ducers. Today many of the remaining producers outside Asia are reaping the benefits of decisions taken in the latter part of the 20th century to move production away from commodities towards specialty products. The continuing trend towards research driven developments of new fibre variants offering a wide range of properties to the market place is set to continue indeed survival of the industry in West Europe and elsewhere depends an innovative approach. Never has the saying been truer than it is now today’s specialty is tomorrows commodity.

5

2.VISCOSE STAPLE FIBER

2.1.MEANING OF VISCOSE STAPLE FIBERS 

Fibers made by chemical treatment of natural cellulose. Depending upon the intended use, viscose fibers are made into textile or cord threads, as well as staple fiber. The manufacturing process is composed of the fol-lowing basic technological operations: making the spinning solution (viscose), forming the threads by the wet method, and trimming and dry-ing them.

Fabrics of viscose fibers are easily dyed and have excellent hygienic properties (hygroscopicity), which is especially important in goods made for popular use. The accessibility of raw materials and the low cost of the chemical reagents, as well as the satisfactory textile properties and broad possibilities for modification, ensure that viscose fibers are eco-nomical to produce and widely used.

The shortcomings of viscose fibers are great loss of durability when wet, tendency to wrinkle, insufficient resistance to friction, and a low degree of elasticity, especially when wet. These shortcomings can be rectified by modification. Modified viscose fibers (for example, polynose fibers) have greater durability when dry and wet (durability loss when wet is 20-25 percent, as against 40-50 percent in ordinary viscose fibers), great resistance to wear, and increased elasticity. Twisted-spatula viscose fibers have more stable winding, which simplifies their combination with natural fibers in manufacturing threads. The tendency of viscose fibers to wrinkle can be diminished by further treatment with various compounds.

In the manufacture of popular goods viscose fibers are widely used for treating silk and staple fabrics, knitted goods, and fabrics for various uses made from combinations of viscose fibers with cotton or wool, as well as with other synthetic fibers. Highly durable viscose cord fiber is

6

used for a wide variety of technical goods. For example, replacing cotton cord in tires with highly durable viscose cord increases the life of the tire and decreases the amount of rubber needed for its manufacture. In 1968 world production of viscose fibers was 3,103,400 tons (42.6 percent of the general output of chemical fibers). Industrial production of viscose fibers began in England in 1905.

7

2.2.PROPERTIES

Features of VSF Traits description

Excellent perfor-

mance

VSF performance is close to natural Cotton fiber, has

good moisture absorption, air permeability, dyeability,

antistatic, and soft texture, particularly moisture absorp-

tion and air permeability, synthetic fiber cannot com-

pare with it.

Good functional

characteristics

The characteristic of synthetic staple fibers, VSF also

had too. Gloss, chromatography, heat, corrosion of VSF

are much better than synthetic, so fabric that made by

VSF are beautiful colors and hanging dynamic.

Obvious environ-

mental advantages

GlVSF is biomass fiber, its waste can be naturally de-

graded, and it would not cause the second pollution, en-

vironmental advantages are obvious.

Strong material

renewable

Cotton linter, wood, bamboo and hemp, that renewable,

recyclable agriculture and forestry resources are main

raw material for VSF, sustainability of VSF is more ex-

celling than synthetic fiber that extract non-renewable

petroleum as the raw material.

8

2.3.PROCESS

The process is as follows:

1. Cellulose: Production begins with processed cellulose

2. Immersion: The cellulose is dissolved in caustic soda: (C6H10O5)n + nNaOH → (C6H9O4ONa)n + nH2O

3. Pressing: The solution is then pressed between rollers to remove excess liq-uid

4. White Crumb: The pressed sheets are crumbled or shredded to produce what is known as "white crumb"

5. Aging: The "white crumb" is aged through exposure to oxygen

6. Xanthation: The aged "white crumb" is mixed with carbon disulfide in a process known as Xanthation, the aged alkali cellulose crumbs are placed in vats and are allowed to react with carbon disulfide under controlled temper-ature (20 to 30 °C) to form cellulose xanthate: (C6H9O4ONa)n + nCS2 → (C6H9O4O-SC-SNa)n

7. Yellow Crumb: Xanthation changes the chemical makeup of the cellulose mixture and the resulting product is now called "yellow crumb"

8. Viscose: The "yellow crumb" is dissolved in a caustic solution to form vis-cose

9. Ripening: The viscose is set to stand for a period of time, allowing it to ripen: (C6H9O4O-SC-SNa)n + nH2O → (C6H10O5)n + nCS2 + nNaOH

10.Filtering: After ripening, the viscose is filtered to remove any undissolved particles

11.Degassing: Any bubbles of air are pressed from the viscose in a degassing process

12.Extruding: The viscose solution is extruded through a spinneret, which re-sembles a shower head with many small holes

13.Acid Bath: As the viscose exits the spinneret, it lands in a bath of sulfuric acid, resulting in the formation of rayon filaments: (C6H9O4O-SC-SNa)n + ½nH2SO4 → (C6H10O5)n + nCS2 + ½nNa2SO4

14.Drawing: The rayon filaments are stretched, known as drawing, to straighten out the fibers

9

15.Washing: The fibers are then washed to remove any residual chemicals

16.Cutting: If filament fibers are desired the process ends here. The filaments are cut down when producing staple fibers

10

2.4..HISTORICAL VIEW

The viscose fibre industry is the oldest man-made fibre business in the world with its roots stretching back to the late 19th century, although commercial production did not begin until 1905 when Courtauld opened its first filament plant. Initially the industry enjoyed a period of substan-tial growth which was followed by an equally dramatic decline in the face of competition from the newer synthetic fibers. However, in more recent times the industry has shown signs of recovery, driven primarily by the commissioning of new plants in Asia. At the same time some fac-tories in the western world and elsewhere have struggled to compete, with many closing down and others running at reduced capacity utiliza-tion. This paper highlights developments in the latest chapter of the global viscose fibre industry by examining the regional changes that have taken place during the first ten years of the 21st century. It shows that far from being in decline, the viscose fibre business is in a healthy state with annual average growth rates exceeding many other fibres in-cluding polyester staple.

Viscose was the first man made fiber introduced in textile production. Viscose has excellent properties that can be engineered and optimized for different textile and nonwoven applications.The name was adopted in 1924, in preference to ‘artificial silk’, by the U.S. Dept. of Commerce and various commercial associations. As early as 1665 the English naturalist Robert Hooke had suggested the possibil-ity of making artificial silk, but the first artificial textile fiber was pro-duced in 1884 by a French scientist, Hilaire de Chardonnet, and was manufactured by him in 1889.Unpopular at first because it was too lustrous and laundered poorly, it has been steadily improved. Cellulose, originally from cotton linters but now chiefly from wood pulp, washed, bleached, and pressed into sheets, is dissolved by chemicals, then forced under pressure through minute holes in a metal cap (spinneret), emerging as filaments that unite to form

11

one continuous strand solidified by passage through a suitable liquid or warm air.The spinning solution may be forced through a larger orifice or slit to produce a monofilament, a ribbon, or a sheet. Filaments are doubled and twisted into smooth, silk-like yarns or cut into staple lengths and spun. Spun rayon can be treated to simulate wool, linen, or cotton.

12

3.INDIAN VSF INDUSTRY

3.1 INTRODUCTION

Viscose IS the first man made fibre to be produced in India . Viscose fi-bre production is mainly concentrated In Asia which contributes to more than 51% of the world production. The major players in Viscose fibre production are China, India, Indonesia, Taiwan, Germany, Austria etc. India Stands as one of the major Producers of Viscose staple fibre. There are only two players in India, namely Grasim Industries Ltd and SIV in-dustries Ltd. Grasim Industries commenced production from 1954 and SIV Industries Ltd in 1961, From a modest beginning of about 50,(‘000)Mtons per annum of Man made Fibre & Filaments in India, it has grown over a period & in ‘94.‘95, it has recorded production of 887(‘000) Mtons which is nearly 17 Times growth. This fibre was ini-tially expected to be a replacement for cotton. However, with the market trends & changing fashion, Pure Viscose spun yarn fabrics are being popular and “Erode” in South India is the hub of Pure Viscose weaving and processing. Fabrics produced will find usage in printing & dyeing for various end uses. In 70’s when there was an acute shortage of cotton, the Government of India made it compulsory that at least 10% of Vis-cose should be blended with cotton. India being a tropical country, with the arrival of Polyester, Viscose friends a blending Partner and Polyester-Viscose which IS unique to India has found innumerable us-age in Suiting, Shirting’s and Dress materials. With the rapid develop-ments of Viscose market , in the present Situation, Viscose has been rec-ognized as a fibre by itself and in India Viscose is no longer dependent on the up and downs of Cotton Market.

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3.2.EXPORTS Viscose spun yarn and the fabrics made thereof, forms an important Seg-ment in export earnings of India. Pure Viscose spun yarn exports which was Rs. 200 million in (‘90-‘91) has shown a remarkable increase of 7 times to Rs. 1400 million (40million US $) in (‘95’96). During the same period, Polyester- Viscose Yarn has increased from Rs.293 million to ‘Ps. 2040 million. (58 million US $). The export of fabrics made of Vis-cose spun yarn and polyester/viscose spun yarn has also been steadily in-creasing and in the year (‘94.‘95) the export of the above fabrics ac-counted for Rs.2502.3 million (71.49 million US$). In India, there is a good potential in improving the export of Viscose based items and with the encouragement form the Government of India, heavy capital invest-ment in spinning, weaving, processing and garment manufacture, the ex-ports will scale new heights.

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3.3.INDUSTRY ENTRY BARRIERS

The VSF industry continue s to remain highly concentrated due to the following reasons :

New players were unable to enter the industry in the 1980s due to government licensing issues. In the 1990s, no new players set up capacities, given the stringent environmental laws and conditions that the new VSF plants had to confirm to .

Any new entrant needs to make arrangements for adequate and re-liable supply of wood pulp. Arrangements would have to be either through captive facilities or long term import contracts.

15

3.4.CAPACITY The past few decades has witnessed predominant use of natura1 cellu-lose from wood pulp to create a very wide range of Viscose fibre. India accounts for nearly 10% of the World VSF Capacity. At present in-stalled capacity in India is 223.9 (‘000) M Tons per annum with M/s.-Grasim Industries Ltd having an installed capacity/ of 184.9 (‘000) M Tons per annum worth plants at Nagda ,Harihar & Mavoor. MIS. SIV Industries Ltd with an installed capacity of 38.95 (‘000) MTons per an-num accounts for 18% of India’s Capacity and the plant is located at Sirumugai in Tamil Nadu, South India. Both the manufacturers have am-bitious expansion programmes. The total capacity in India is Likely to reach a level of 338.2 (‘000) Mtons per annum by 2000 AD. The de-mand for Viscose is increasing year after year due to its specific proper-ties like high absorbency & better dye up-take.

Capacity and Production Trends (Million kg)

2007-08 2008-09 2009-10 2010-11 2011-12 2012-130

50

100

150

200

250

300

350

400

Capacity Production

Source: Crisil Research

16

3.5.VSF DOMESTIC DEMAND

Demand Analysis and growth rate of past years

2007-08 2008-09 2009-10 2010-11 2011-12 2012-130

50

100

150

200

250

300

Demand

Demand (in million kg)

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

-15

-10

-5

0

5

10

15

20

25

Growth Rate (in per cent)

Growth Rate (in per cent)

Source: Crisil Research and Industry

17

3.6.TRENDS IN USAGE Viscose Staple Fibre produced in India finds outlet in pure spinning which is converted into fabrics for both dyeing and printing qualities and is characterized by ease of dyeing, good absorbency, rich and full dying properties and is mainly exported. Viscose, as an excellent fibre for blending has an outstanding future both in clothing and increasingly In the Nonwoven and hygiene sectors. In blended yarns, viscose staple fi-bre is popular in Polyester blends. This is mainly because of the hygro-scopic property of Viscose and its clean nature. It also has the advantage of staple tut length and ease in spinning on cotton spinning System. Hence, viscose will serve as a major complementary fibre. Although the non woven Segment imports infancy in India. there will be a demand for absorbent fibres in various field& of nonwoven like personal hygiene, wipes, medical applications, disposables and filter industry Quality has become an increasingly important distinguishing feature. Recently, there is a rise in manufacture of fine denier fibres. The Change In market be-havior In the fine denser area exerts a direct influence on process control in viscose manufacture. Parallel to the development in the synthetic fibre area, the shift of market shares in favor of finer deniers in the recent past took place at an extreme Speed. This represents a threat which is ex-plained by the decrease in linear production on one hand and on the other hand, the sensitivity of fine denier fibres towards production process leading to drop in quality. This has prompted manufacturers to narrow the process Parameters and maintain effective process control us-ing electronic control devices.

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3.7.ISSUES OF VISCOSE INDUSTRY IN INDIA Viscose Industry is basically highly capital Intensive and this makes it unviable for new entries and hence makes expansion more sensible. The capital cost in India is very high and the rising cost of production makes it difficult to gain foot hold in the international market. The cost of en-ergy is high due to low plant load factor and excessive transmission losses. Pulp cost is another major cost component which leaves the man-ufacturers with no other Option but to modify the infrastructure and technology to suit the location for feasibility and attain competitive edge. The Problem of pollution in Pulp and Viscose industry needs to be analyzed carefully since the pollution control is highly capital intensive and also results in high running cost. In India, the Problem of pollution are well recognized and the manufacturers are making large investments in this direction. India is carefully watching the latest developments in solvent spinning technology and very soon, manufacturers may opt for this based on the viability.

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3.8.ALTERNATE RAW MATERIALS Since the beginning of Viscose manufacture, renewable forest wood such as Eucalyptus, Pines Paula, Wattle and Bamboo has been the major raw material for wood pulp manufacture in India. Non availability and high costs have prompted producers to look for alternatives, There is considerable head way in using green jute and Biogases as a substitute for wood. These are agricultural or industrial byproducts and India being the second largest Producer of Jute, there is abundant availability Use of these raw materials also prevents deforestation and hence aids in pre-serving ecology. Trials in developing hybrid varieties of eucalyptus grown in the plains have also been successful.

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3.9.VISCOSE FIBER INDUSTRY TECHNOLOGY DEVELOPMENT DIRECTION

With the development of science and technology of modern society and people return to nature and environmental awareness enhancement, vis-cose fiber with its complete varieties, excellent properties, more and more application industry and consumers. Its application scope has been expanded from traditional industries to clothing, adornment, health and industrial products etc. But viscose fiber production with other chemical fiber production, there exist the problems of environmental protection. In addition, viscose process of production equipment and also too multi-farious, the equipment investment is high. Therefore only in solving these problems, under the premise of viscose fiber industry can more quickly to develop healthily.Viscose fiber industry technology development direction of roughly can be summarized as the following several aspects:(1) reduce the pollution of the environment, development of new spin-ning cellulose fiber manufacturing system.(2) production process rationalization and optimization.(3) strengthen the basic theories of viscose fiber.(4) the development of new technology, expand the pulp pulping sources of the raw materials.(5) to improve the existing fibers with special performance, the develop-ment of new varieties.

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3.10.PRICE

Price of Viscose Staple Fibre were on an upward trend since the start of 2010-11,backed by rising wood pulp prices and supplemented by firm cotton prices. Although high prices dented the domestic demand for VSF in 2010-11, manufactures kept prices firm, drawing support from an un-precedented rise in cotton prices . VSF prices reached an all time high of

155 per kg in 2011₹

Viscose staple fibre market followed a downward trend and prices went down due to sluggish demand from the downstream market in the Chi-nese domestic market. Viscose staple fibre market remained weakened due to sluggish market outlook during the second half. Viscose staple fi-bre prices moved down triggered by the rumors about low price product availability in the market during the period.

Mar-08

Jul-08

Nov-08

Mar-09

Jul-09

Nov-09

Mar-10

Jul-10

Nov-10

Mar-11

Jul-11

Nov-11

Mar-12

Jul-12

Nov-12

Mar-13

0

20

40

60

80

100

120

140

160

180

VSF Price Per Kg

VSF Price Per Kg

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3.11.KEY ENTERPRISES

Sr.No. Name of the Company City

1 Grasim Aditya Birla Group Mumbai,Nagda, Har-ihar,Kharach

2 Ugan Impex Limited Surat3 Everyflow Petrofils Limited Mumbai4 Orange Yarns Surat5 Ridhi Fibres Amritsar6 Rameshwar Textiles Surat7 Raj International Limited Surat8 Lenzing Modi Fiber India Pvt Limited Mumbai9 Century textile and Industry Limited Mumbai10 Hanung Toys and Textiles Ltd. Mumbai

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4.GRASIM ADITYA BIRLA GROUP

4.1.Introduction

Grasim Industries Limited is a global leader in viscose staple fibre and ranks among India's largest private sector companies with a consolidated net revenue of Rs.216 billion and consolidated net profit of Rs.22.8 bil-lion "(FY 2011). starting as" a textiles manufacturer in 1948, Grasim's businesses today comprise viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement, which contribute over 90 per cent of its revenues and operating profits at a consolidated level.

The Aditya Birla Group is the world's largest producer of VSF, com-manding a 21 per cent global share. Grasim, with an aggregate capacity of 333,975 tpa has a global share of 11 per cent. It is also the second-largest producer of caustic soda (which is used in the production of VSF) in India. As a result of restructuring in FY 2010 and FY 2011, the cement business has been consolidated with Grasim's subsidiary, UltraT-ech Cement Limited. UltraTech has a capacity of 52 million tpa and is a leading cement player in India and eighth largest in the world.

Grasim has a strong presence in fabrics and synthetic yarns in India through its subsidiary, Grasim Bhiwani Textiles Limited, and is well known for its branded suiting’s, Grasim and Graviera, mainly in the polyester-cellulosic branded menswear. Its textile plants are located at Bhiwani (Haryana) and Malanpur (Madhya Pradesh).

24

Global Fiber Pie

CottonVSFSyntheticRaw wool Others

Source: Fiber Organon

Global Market Share of VSF

ChineseLenzingGrasimOthers

Source : Company Estimates

25

4.2.GRASIM VSF GLOBAL PRESENCE Canada

3 pulp plants in joint venture

Sweden

Domsjo Pulp Plant

Turkey

Fiber Plant under Planning

China,Hubei

Fibre plant (72 KTPA) in joint venture

India

3 fibre plants Pulp plant Caustic soda plant One fibre plant and caustic soda plant under construction.

South East Asia

2 Fiber plants of Group Co. of 338k TPA Wood Plantation at Laos (under progress)

4.3.QUARTERLY ANALYSIS OF GRASIM

26

(Viscose Staple Fiber Industry)

2012-13 2011-12Particulars Q1 Q2 Q4 Q3 Q2

Capacity (TPA) 333975 333975 333975 352225 352225Production (MT) 83516 84233 83349 79798 88297Sales Volume (MT) 78959 78215 94904 85312 78579Net Reveneue ( ₹crores) 1082 1985.1 1227.9 1164 1030Realisation (₹/MT) 124689 128499 144962 169462 189462

SOURCE: Quarterly Reports of Grasim

4.4.GRASIM IN INDIA

27

Grasim's VSF plants are located at Nagda in Madhya Pradesh, Kharach in Gujarat and Harihar in Karnataka, with an aggregate capacity of 352,225 tpa.

NagdaNagda is its largest unit producing a wide range of VSF to suit customer requirements in terms of length, denier and colour and also second and third generation fibres like Modal, Excel and Solvent Spun fibres, re-spectively. Nagda is also the largest producer of spun-dyed specialty fi-bre in the world.

HariharThe Harihar unit houses facility for manufacture of both VSF and rayon grade pulp, the basic raw material for VSF. The company's Rayon Grade plant was the first in India to use totally indigenous wood resources with in-house technology for producing rayon pulp with an innovative oxy-gen bleachingprocess to reduce the use of chlorine. 

Kharach The VSF plant at Kharach, set up in 1996, employs the most modern technology giving it a competitive edge in the export market.

4.5GRASIM JOINT VENTURES (JV)

28

Grasim has the following joint ventures overseas: 

AV Cell Inc. and AV Nackawic Inc. in Canada:

AV Cell and AV Nackawic supply dissolving grade pulp to the Group’s VSF units in India, Thailand and Indonesia. Aditya Birla Group today informed that it has increased its stake from 75 per cent to 95 per cent in the two joint venture companies in Canada viz. AV Cell Inc. and AV Nackawic Inc. at a total consideration of around Canadian $ 9 million. The Group has acquired the additional 20 per cent stake in these two companies from Tembec Group, its joint venture partner in these enti-ties. While Grasim Industries Ltd. has acquired the additional stake in AV Cell Inc. increasing its holding in AV Cell from 25 per cent to 45 per cent, PT Indo Bharat Rayon Indonesia, has acquired the additional 20 per cent stake in AV Nackawic.

Domsjö Fabriker AB in Sweden:

Grasim acquired one-third stake in Domsjö Fabriker AB, a leading Swedish speciality pulp and bio-refinery company in June 2011. With this acquisition, Grasim is assured of high-quality dissolving grade pulp. During the year 2011, your Company acquired a 1/3rd stake in Aditya Group AB, Sweden, which controls Domsjo Fabriker AB, Sweden ("Domsjo"), a leading manufacturer of specialty pulp used in the manu-facture of Viscose Staple Fibre (VSF). The acquisition will ensure sup-ply of high quality dissolving grade pulp for your Company's VSF projects.

AV Terrace Bay Inc. in Canada:

29

In line with the strategy to secure key inputs, Grasim acquired assets of Terrace Bay in July 2012 in JV with Thai Rayon, a Group company. This will help in meeting the increasing pulp requirement for VSF busi-ness after the mill is converted into a dissolving grade mill. Grasim In-dustries has acquired Canada’s Terrace Bay Pulp for around $300Mn. Grasim will utilize Terrace Bay 285,000 tonnes of paper grade pulp ca-pacity by converting into rayon grade pulp that can be used by Grasim for its viscose staple fibre operations. Initially, the group will invest $110Mn and would make further investment of $250 Million in phases. Grasim Industries would acquire 40% in a special entity created for this acquisition, while the rest would be held by Thai Rayon Public Com-pany Ltd. The Terrace Bay Pulp mill, owned by Buchanan Forest Prod-ucts, has been shut for the past two months. The promoters have been trying to sell the company due to liquidity crunch. Incorporated in 1948 by Kimberly-Clark Corporation, Ontario based Terrace Bay Pulp mill is capable of producing various blends of northern bleached softwood kraft pulp and northern bleached hardwood kraft pulp, together with certain other byproducts. Neenah Paper acquired the mill from Kimberly-Clark in 2004. Currently Terrace Bay Pulp is a wholly-owned subsidiary of Lucky Star Holdings Inc. of Buchanan Group. In 2006, the Buchanan Group acquired the mill from Neenah Paper. The mill has two full inte-grated pulp lines, and three integrated pulp machines, with a rated capac-ity of approximately 550,000 air-dried metric tonnes of pulp per year (hardwood and softwood combined).Incorporated as a textiles manufac-turer in 1948, Grasim's businesses comprise viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement, which contribute to over 90% of its revenues and operating profits.

Birla Lao Pulp & Plantation Limited in Laos:

30

To further strengthen the backward integration in pulp, Birla Lao has been formed as a JV with other associate companies for raising captive plantations at Laos. This will provide a low cost source for wood to meet future requirements of a green field pulp plant in due course of time.

The Aditya Birla Group to invest US$ 350 million for plantations and pulp plant in Laos

The Aditya Birla Group today announced an investment of US$ 350 mil-lion in Lao People's Democratic Republic (Laos) for setting up of a project to raise pulp wood species plantations and a pulp plant for its vis-cose staple fibre (VSF) business. Grasim Industries Limited, India, Thai Rayon Public Co. Ltd., Thailand, and PT Indo Bharat Rayon, Indonesia — all of whom belong to the Aditya Birla Group — will invest in this project as equity holders.

The Group has secured 50,000 hectares of land from the government of Laos on lease for a 75 year period. Eucalyptus plantations raised on the land would provide the feed for the pulp plant. The project is to be im-plemented in two phases, first the plantation phase and second, the set-ting up of the dissolving pulp plant, given that eucalyptus plantations normally have a growth cycle of seven years. The commissioning of the pulp plant would coincide with the harvest of the first plantation, i.e., the seventh year. The pulp produced in Laos would be exported to the Group's rayon fibre manufacturing units in India, Thailand and Indone-sia, as well as newer locations.

Birla Jingwei Fibres Company Limited in China:

31

Through Birla Jingwei, Grasim has its footprint in China, the largest VSF market globally. Plant capacity was doubled in 2012 and currently the capacity is 72,000 TPA.

This spread and scale of operations make the Group's VSF operations very cost competitive. Moreover, vertical integration into manufacturing of rayon grade pulp and horizontal integration into production of princi-pal raw material required for VSF production, namely, caustic soda, in-termediate inputs namely CS2, sulphuric acid along with captive power and steam generation facilities, further enhance its competitive edge. 

4.6.RESEARCH AND DEVELOPMENT OF GRASIM

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Grasim has established a very strong research and development (R&D) base covering different stages of the value chain. 

Grasim Forest Research Institute, Harihar is involved in R&D of forestry. Birla Research Institute for Applied Sciences (BRI), Nagda is involved in the development of different generations of cellulosic fibres. Textile Research Application Development Centre (TRADC) at Kharach, a NABL accredited laboratory, is involved in addressing R&D related to downstream textile value chain comprising various fibres, yarns, processing, garments, etc.

With the capability to offer the entire range of cellulosic fibre under the umbrella brand of “Birla Cellulose”, Grasim has positioned itself as a dependable supplier of cellulosic fibres for “Feel, Comfort and Fashion” across global markets. To penetrate into niche market segments and to grow further, the division has ventured into the production of high per-formance viscose fibres aptly named Viscose Plus, High Wet Modulus Fibres (Modal) and new generation Solvent Spun Fibres and Birla Excel.

Grasim is also the largest producer of Sodium Sulphate, a by-product of VSF manufacture. This chemical is widely used in the paper and pulp, detergent, glass and textile industries.

Efforts to consolidate pole position in the VSF business where Grasim enjoys leadership status continue. Through a Greenfield project at Vi-layat (Gujarat) - 12,000 TPA and Brownfield expansions at Harihar (Karnataka) - 36,500 TPA, Grasim intends to benefit its leadership posi-tion. Collectively, these project will ramp up capacities by 50 per cent to 498,000 TPA.

Capacities at a glance:

Division Capacity

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Viscose Staple Fibre (VSF) 352,225 tpaJoint venture:: Birla Jingwei Fibres Company Limited 70,000 tpaRayon grade pulp:: Harihar, Karnataka 70,000 tpaJoint ventures

::AV Cell Inc (Atholville, New Brunswick in Canada)

126,000 tpa

::AV Nackawic Inc. (Nackawick, New Brunswick in Canada)

189,000 tpa

:: Domsjö Fabriker (Sweden) 255,000 tpa

::AV Terrace Bay Inc. (North Western On-tario, Canada)

280,000 tpa

4.7.Some of the overseas top viscose staple fibre produc-ing industries :

Zhejiang Fulida CO. LTD

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Zhejiang Fulida CO., LTD formerly as Zhejiang Fulida Fiber CO., LTD, is a foreign-invested limited liability company since DEC 2009. The company is located at Linjiang industrial zone, Xiaoshan, Hangzhou City. Zhejiang Fulida CO., LTD, a Sino-foreign joint venture specialized in producing viscose staple fibre and differential &functional viscose staple fibre. The company also mainly involved in distribution and technical development of viscose staple fibre.

Zhejiang Fulida CO., LTD, the largest viscose staple fiber manufacture

in China, is recognized as a leader in the field of viscose staple fibre in-

dustry. The products are awarded as China top brand and Hangzhou fa-

mous brand. The company is one of participant in organization of vis-

cose staple fibre national standard. Also, the company is participant for

drafting Zhejiang standards of viscose (long, short) unit of energy con-

sumption limitation and calculation method. Company takes a leading

position in energy saving, environment protection, production technol-

ogy and equipment, with multinomial patents for invention and utility

model patent. Output and market share ranks are the first in viscose sta-

ple fibre industry area.

Xinxiang Bailu Chemical Fibre Group Co., Ltd 　

Xinxiang Bailu Chemical Fibre Group Co., Ltd.(formerly Xinxiang

Chemical Fibre Plant)is the one of largest enterprises specialized in tex-

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tile raw material, Its total assets reach RMB 4.0 billion . The company

occupies an area of more than 3.0 million square meters . Its economic

profit ranks the front position among viscose enterprises in China.

The main productions are centrifugal viscose rayon filament yarn , con-

tinuous viscose rayon filament yarn, viscose staple fibre, polyester,

spandex of 5 series with more than 100 varieties, The company newly

developed 10 items of functional fibre, such as dope clyed yarn bamboo

viscose filament yarn, soya bean viscose fibre, and obtain patents more

than 30 items, The production sells well in domestic market and foreign

market. The trademark is “Bailu”.(“Egret”in English).

The company was established in 1960 and put into production in 1965.

Through more than 40 years’ development, its annual production capac-

ity has reached 108,000 tons, include viscose rayon filament yarn 50,000

tons, viscose staple fibre 50,000 tons, synthetic fibre 5,000 tons, spandex

3,000 tons. And the company has the biggest continuous viscose rayon

yarn production line and the advanced production line for continuous

polymerization, dry spinning spandex. The company has the biggest vis-

cose rayon yarn production capacity in the world.

 

5.VISCOSE STAPLE FIBER PRODUCTS

Appare l: Accessories, blouses, dresses, jackets, lingerie, linings, millinery, slacks, sports shirts, sportswear, suits, ties, work clothes.

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Home Furnishings:  Bedspreads, blankets, curtains, draperies, sheets, slipcovers, tablecloths, upholstery.

Industrial Uses:  Industrial products, medical surgical products, nonwo-ven products, tyre cord.

Other Uses:  Feminine hygiene products, baby wipes and kitchen wipes.

6.FUTURE OF VSF VSF consumption to gain momentum post 2013-14

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Viscose staple fibre (vsf) accounts for about 10 percent of total man-0made fibre consumption in India. It is primarily used in the spinning industry to produce blended yarn and non- cotton spun yarn. End use application of VSF include suiting, shirting, knitwear, home textiles and non-woven clothes.

Significant demand growth in 2013-14 led by strong exports and growing domestic demand.In 2013-14.Vsf demand (domestic and export) is estimated to in-crease at significant 11-12 percent mainly driven by strong export growth and gradual revival in domestic demand for blended and non-cotton fabric. During 2013-14 export are estimated to account around 30 percent of total domestic production, up from 24 percent in last year. Exports to Indonesia have significantly increased to reach above 10 million kg in 2013-14 from 1.2 million.Additionally, exports to Turkey, Pakistan, Bangladesh also ex-pected to grow moderately. On domestic consumption front, more than 60 percent of the demand is derived by blended yarn which is consumed for blended fabric production. In 2013-14, VSF demand is expected to continue to grew at healthy pace on the back of increasing demand from quality ori-ented application segments like comfort fabric and home textiles. Additionally, removal of excise duty in budget in 2012-13 boost ready garments demand thereby supporting the overall fabric de-mand. Domestic VSF demand is expected to grow at 3-4 in 2013-14 y-o-y. Further exports will continue to grow as a result of in-creasing demand from processing hubs like Turkey and Bangladesh

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2006-07 2011-12 2012-13 2013-14(E) 2017-18(P)0

100

200

300

400

500

600

ExportDomestic

Domestic demand estimated to be moderate in 2013-14(“million kg’)

E: Estimated, P: Projected

Source: TXC India

Growing demand from quality application will drive VSF demandPrevailing economic uncertainties and weak domestic demand re-sulted in subdued growth of overall textile industry. However, eco-

39

nomic recovery in the global market and improving domestic de-mand will lead to moderate growth rates in 2013-14. On the back of improving scenario, demand from industrial and technical tex-tiles will gather pace post 2013-14.Demand for blended and non cotton spun yarns would continue to rise over the long term, on the back of growing demand from variety of in-use applications. Con-sequently, domestic VSF consumption is expected to grow at a CAGR of 3-4 per cent. Exports too are expected to report a healthy annual growth rate of 12-15 per cent (2012-13 to 2017-18), re-pelled by rising international demand. Although, exports are ex-pected to grow at slower pace as compared to previous 5year as a result of increasing competition from Chinese producers.

Capacity expansions to pull down operating rates from 2013-14 onwardsIn 2012-13 driven by high export demand and growing domestic demand industry operating rates are estimated to increase above 100 per cent.. However with scheduled commissioning of Grasim’s Vilayat plant during Q1 FY2014 and de-bottle necking process, operating rates are expected to decline to 80 percent in 2013-14.

VSF operating rates to decline after 2012-13

40

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14 (E)

2014-15 (P)

2015-16(P)

0

50

100

150

200

250

300

350

400

450

500

ProductionCapacity

E: Es-timated, P: Projected Source: TXC,India

OPERATING RATE

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14 (E)

2014-15(P)

2016-17(P)

0

20

40

60

80

100

120

Operating Rates (in percent)

Operating Rates (in percent)

E: Estimated, P: Projected Source: TXC,India

41

7. CONCLUSION Rapid increase in demand for fibers in coming years will require major expansions in capacities of fibre production. This situation will cal1 for expansion In the man-made fibre sector as natura1 fibres may not be able to address the requirement. Synthetics will certainly grow but will require a good blending component. Viscose will have a strong Posi-tion in the future as an alternate raw material because of:

Growing demand for absorbent fibres Renewable raw material sources Biodegradability Excellent for blending Niche fibre in fashion design Excellent dyeing and comfort characteristics.

In future, the market demand for cellulosic fibre and yarn will continue to be buoyant due to the positive physical properties of the fibre. The main reason behind this being the constant increase in Viscose produc-tivity paralleled by the reduction in average denier acting as a guarantee towards Viscose industry’s continued important in the next century. The quality of the product and the economical production of the same and necessary measures taken regarding environmental protection will a play crucial role in the development of viable solutions for a long term. As an important raw material with unique properties, Viscose has all the neces-sary strengths to reign in the future in Indian Textile Industry.

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7. BIBLIOGRAPHY

o http://texmin.nic.in/policy/Fibre_Policy_Sub_

%20Groups_Report_dir_mg_d_20100608_2.pdfo http://www.researchandmarkets.com/reports/1543027/

world_viscose_trends_in_demand_and_suppy_2010o http://www.lenzing.com/fileadmin/template/pdf/konzern/

lenzinger_berichte/ausgabe_81_2002/LB_2002_Kogler_02_ev.pdfo http://www.grasim.com/products/birla_viscose.htm

o http://grasim.com/investors/downloads/Grasim_Q3FY12-

13_Presentation.pdfo http://grasim.com/investors/downloads/

Corporate_Presentation_jan13.pdfo www.fibre2fashion.com/.../viscose-staple-fibre-vsf-price-trends-

industry-o www.livemint.com/.../Viscose-staple-fibre-plays-spoilsport-for-

Grasim-Io http://www.moneycontrol.com/news-topic/viscose-staple-fibre/o www.adityabirla.com/Businesses/Profile/Grasim-Industries-

Limitedo www.yarnsandfibers.com/.../viscosestaplefibre-vsf-price-trends-

reportso http://www.dealcurry.com/BasicIndustries.htmo www.tradeindia.com/manufacturers/viscose-staple-fiber.htmlo http://articles.economictimes.indiatimes.com/2012-10-11/news/

34387516_1_chinese-vsf-vsf-division-viscose-staple-fibre

43

8.ACKNOWLEDGEMENTI take this opportunity to express my profound gratitude and deep re-

gards to my guide Mr.Chetan and Mr.Abhinav for his exemplary guid-

ance, monitoring and constant encouragement throughout the course of

this thesis. The blessing, help and guidance given by him time to time

shall carry me a long way in the journey of life on which I am about to

embark.

 I am obliged to staff members of Standard Chartered, for the valuable

information provided by them in their respective fields. I am grateful for

their cooperation during the period of my assignment.

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