Agreement details being finalised
Grasim Industries is entering into an agreement which gives it the right to manage & operate the Viscose Filament Yarn (VFY) business of Century Textiles & Ind. Ltd. (CTIL) for a period of 15 years. Consequently, Grasim will have the right to use the relevant assets of CTIL. However, the ownership of assets will still remain with Century Textiles. With this, Grasim expands its VFY business, given the limited capacities available in the market and also since organic expansion was not feasible.
Grasim would be paying Rs. 600 crores as royalty and a refundable security deposit of Rs. 200 crores which is interest free. The transaction is expected to be done within a couple of months.
With 22K MT capacity, Grasim is one of the leading players in the industry. It is uniquely positioned with its cutting-edge Enka SSY technology. It produces superfine, fine and coarse yarns with all three technologies, pot spun yarn, continuous spun yarn and cutting edge spool spun yarn. It also caters to the export markets in higher denier segments.
Grasim is amongst the top VFY producers in India accounting for 61% of the exports from the country, making it the largest exporter of VFY. It is looking to exploit the significant opportunities in the fine deniers space.
Grasim, with the new SSY technology and CTIL with presence in rayon tyre yarn, offers significant growth prospects. The synergy potential in plant and sales operations will provide additional benefits and possible to leverage the brand strength in value chain.
CTIL’s VFY is a steady cash generating business. It is strategically located at Shahad which is closer to customers (mainly Surat) and port location (JNPT) for raw material imports and exports. It has a capacity to produce 25,000 TPA with a network of 98 dealers pan-India. The combined business will have a capacity of almost 46,300 tons of VFY, generating a revenue of Rs. 1,701 crores.