Grasim likely to buy stake in Austrian fibre-maker

The Aditya Birla group is believed to be in advanced talks to pick up stake in Austrian fibre manufacturer Lenzing.

While an industry source said Grasim Industries, a Aditya Birla group company, might acquire a stake in Lenzing, Aditya Birla group spokesperson, when contacted, said, "We do not comment on speculative reports."

Although it could not be ascertained whether the acquisition would be for the entire equity of the Austrian firm or for a stake in it, the deal is expected to help the Indian group carve a niche in the global VSF (viscose staple fibre) market.

The acquisition will ramp up its fibre production capacity by almost 4,53,800 tonne.

B&C Holding, the promoter, holds nearly 75 per cent stake in Lenzing.

Lenzing, which employs 5,000, has a presence in pulp & paper, fibre for textile applications and the non-woven industry, and plastics. In 2005, its sales stood at $1.24 billion from production of 4,53,800 tonne fibre.

The company, with publicly listed shares worth US $2 billion, has production sites in the US, the UK, Austria, China and Indonesia. Lenzing, to its credit, has several specialities such as modal and tencel fibres.

Grasim's businesses comprise viscose staple fibre, cement, sponge iron, chemicals and textiles.

In September, Grasim Industries had signed an agreement to take over the assets of Hubei Jing Wei Chemical Fibre Company through a joint venture. The Chinese company, located in the Hubei Province in mainland China, owns a 30,000 tonne viscose stable fibre plant.

Last month, Aditya Birla Nuvo, another company of the Aditya Birla group, said it would make Birla NGK Insulators Pvt Ltd (Birla NGK) its subsidiary and entered into a share-purchase agreement.

Birla NGK is a 50:50 joint venture between Aditya Birla Nuvo and Japan-based NGK Insulators for insulator business.