Birla: Looking ahead

Mumbai, March 17: The Aditya Birla group is ramping up its international presence to feed its viscose staple fibre (VSF) business. It is investing $350 million in Laos to raise pulp wood plantations and set up a pulp plant.

Three companies belonging to the group ? Grasim Industries, Thai Rayon, and PT Indo Bharat Rayon, Indonesia ? will invest in the project as equity holders.

A press statement issued by the group today said it had secured 50,000 hectares of land from the government of Laos on lease for a 75-year period. Eucalyptus plantations raised on the land would provide the feed for the pulp plant. The pulp produced in Laos would be exported to the group’s rayon fibre manufacturing units in India, Thailand and Indonesia and other locations.

The project will be implemented in two phases. The first phase will cover plantation and the second will see the setting up of a pulp plant. As eucalyptus plantations normally have a growth cycle of seven years, the commissioning of the pulp plant would coincide with the harvest of the first plantation (seventh year).

“This integrated plantation and pulp plant project with a 2-lakh-tonne capacity, is a forward step, planned ahead of time to ensure that our future expansion needs are met,” said Kumar Mangalam Birla, chairman of the Aditya Birla group.

Birla added that in the cellulose fibre business, the group had a leadership position globally and it intended to grow the business exponentially.

“We will require far larger quantities of pulp as our plans fructify. Our strategy to maintain our edge dictates the setting up of holistic backward integration from the plantation to the final VSF production,” he observed.

Shailendra Jain, director of the group’s pulp and fibre business, said the company was entering Laos to leverage the liberal foreign investment environment there. “Laos is also strategically located to support our rayon fibre manufacturing plans in the South East Asian region where the textile hubs are growing,” he said.