Grasim becomes virtual owner of its Canadian JVApril 14th, 2008 - 6:55 pm ICT by admin
Ahmedabad, April 14 (IANS) Grasim Industries Ltd, the flagship company of the Aditya Birla Group (ABG), announced Monday that it has increased its stake in AV Cell Inc, a joint venture (JV) with Tembec of Canada, from 25 percent to 45 percent, at a total consideration of around Canadian $6 million (Rs.240 million). With this deal, ABG’s total stake in AV Cell has increased from 75 percent to 95 percent, making it the virtual owner of the JV.
The $2.5 billion AV Cell, which commenced operations in 1998, is manufacturing soft and hardwood pulp.
The pulp is a key input for the group’s viscose staple fibre (VSF) business. AV Cell’s entire production of 125,000 tonnes of dissolving grade chemical pulp is exclusively supplied to ABG’s VSF units in India, Thailand, Indonesia and China.
VSF is a manmade, biodegradable fibre with characteristics akin to cotton. ABG has three VSF plants across the country - in Nagda in Madhya Pradesh, in Harihar in Karnataka and in Kharach in south Gujarat.
According to the JV agreement, inked in 2005, ABG became the majority equity holder in Tembec’s St. Anne Nackwaic Pulp Mills in the province of New Brunswick in Canada.
Speaking on the JV during the signing, ABG chairman Kumar Mangalam Birla said: “This move is consistent with our group’s strategy of reinforcing our competitive edge in the cellulosic man-made fibre sector, through setting up fully integrated operations, virtually from the `forest to the fabric’ stage.”
ABG has hinted its intention to invest Rs.10 billion in Kharach plant in the current fiscal. The company’s thrust will be on value-added new products which are expected to buoy up the demand for VSF products.
The Kharach plant has an annual manufacturing capacity of 127,750 tonnes. The company’s total VSF capacity is 333,975 tonnes per year.
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