Board of Grasim Industries approves an arrangement with Century Textiles & Industries

At meeting held on 12 December 2017

The Board of Grasim Industries at its meeting held on 12 December 2017 has approved an arrangement with Century Textiles & Industries (CTIL), involving the grant by CTIL to the Company, of the right and responsibility to manage, operate, use and control the Viscose Filament Yarn Business of CTIL, which comprises the manufacturing and sale of viscose filament yarn, rayon tyre cord and chemicals including caustic soda, sodium sulphide, sulphuric acid, carbon-disulphide, liquid chlorine, hydrochloride acid and compressed hydrogen M3 (VYF business) for a duration of 15 years, for a commuted royalty of Rs 600 crore to be paid by the Company to CTIL (Right to Manage and Operate). The Company shall also provide CTIL with Rs 200 crore as interest free, refundable, security deposit and pay to CTIL consideration for the transfer of CTIL's working capital to the Company, at actuals.

In this regard, the Board has approved the execution of an agreement with CTIL. The grant of the Right to Manage and Operate the VYF Business is subject to fulfilment of certain condition, including approval of lenders.

 

As a part of the agreement, CTIL shall grant the Company the right to use its manufacturing operations situated at Murbad Road, Shahad, Thane, Maharashtra having capacity of 25,000 TPA and the underlying lands. CTIL shall continue to remain the owner thereof. Post completion of the tenure of the agreement, CTIL shall resume operation of VYF Business. The risks and rewards, and the profits and losses emanating from the operations of the VYF Business shall be to the Company's account for the duration of the Agreement

As a direct consequence of the agreement, the Company shall increase its production capacity with respect to viscose filament yarn from its existing capacity of 21,300 TPA to 46,300 TPA.

The date of effectiveness of the proposed capacity addition is expected to be on or before 12 February 2018.

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