Grasim to invest C$9m for Canada JV

Grasim's equity investment in the proposed joint venture with Canada's Tembec for acquisition of St Anne Nackawic Pulp Mill will be Canadian C$9 million (about Rs 32 crore).

The acquisition will be made by a joint venture amongst Grasim, other overseas Aditya Birla Group companies and Tembec, in which ABG will be the majority partner and Tembec, the lead operator.

The mill has a capacity of 750 tonne per day and its operations, which were suspended in August/September 2004, would commence in the third quarter of 2005-06.

The realisations of company's viscose staple fibre (VSF) business were up 9 per cent at Rs 79,008 per tonne in line with the international trend, leading to higher operating profit. The VSF production in 2004-05 was 247,952 tonne.

Grasim has planned a capital expenditure of Rs 602 crore over the next two years on modernisation, de-bottlenecking and capacity expansion to meet the expected increase in demand.

The company's capital expenditure in 2004-05 was Rs 120 crore. The outlook for VSF business is good, but realisations will be affected due to lower cotton prices.

The grey cement production was up 5 per cent at 12.44 million, while sales volume was up 6 per cent.

The company's capital expenditure in cement business will be Rs 920 crore in the next two to three years for modernisation, de-bottlenecking, setting up of power plants and capacity expansion. The company spent Rs 115 crore in 2004-05.

Realisations in Grasim's sponge iron business surged by 39 per cent to Rs 12,774 per metric tonne, due to higher international scrap prices and strong domestic demand.

Production and Sales volumes rose by 14 per cent over the last year. Grasim's chemical business recorded 4 per cent growth in sales volumes and 15 per cent increase in realisations at Rs 18,836 per metric tonne.