Calcutta, Aug. 2: Grasim Industries is likely to spin off its chemical division into a separate entity as a part of a wider restructuring process within the group.
Sources say the AV Birla group flagship, which recently took control of Larsen & Toubro’s demerged cement unit, is weighing plans to divest all non-core activities.
Sponge iron is another line of business that has added little to the group topline of over Rs 5000 crore and, hence, could be on the block. Sources say the idea is to come out of non-core activities and strengthen the mainstay.
“The chemical division was started in 1972 as a captive source of caustic soda. But now the business strategy has changed. In the new situation, we are looking afresh at areas that are not a priority. We will come out of these in the next stage of restructuring,” they said.
The two major businesses of Grasim are cement and viscose staple fibre; textiles, the third, contributes little. Sources said the plan is to emerge as a cement company with the largest output.
The VSF and textiles business could have to be revamped, either by spinning them off into a separate outfit, or folding them into a group firm with similar interests.
Grasim’s spokesperson was not available for comment.
The chemical division has a capacity of 1,60,000 tones per annum. Although it was started as a captive source for chemical supplies, it now sells to other firms. At present, it contributes only 5 per cent to the turnover.