Grasim Industries Ltd will invest INR100 billion over the next two years to raise its production capacity of cement and double viscose staple fiber, said the company’s director Wednesday.
The company, a part of the Aditya Birla Group, will spend INR80 billion to increase its annual production capacity of cement by 45 per cent to 45Mt from 31Mt.
Another INR20 billion will be spent over the same period to almost double its annual production capacity of viscose staple fiber to 353,000t.
"The investment is part of our INR100 billion capital expenditure plan to expand cement and VSF businesses," D.D. Rathi, Grasim’s director told Dow Jones Newswires in an interview.
More than half of the investment planned for the cement business will be spent on Grasim’s production plants in the northwestern state of Rajasthan.
The rest of the INR80 billion will be invested in the plants run by Grasim’s unit Ultratech Cement Ltd. (, Rathi said. The plants are located in the western state of Gujarat.
Almost 60% of Grasim’s revenue comes from the cement business. The company posted revenue of INR141 billion for the financial year that ended March 31, 2007.
Grasim Wednesday also said it will sell its 53.63 per cent stake in Shree Digvijay Cement Co. to Portugal’s Cimpor-Cimentos De Portugal for INR3.22bn ($81.7m).
"We want to rationalize our cement operations and Cimpor wanted to enter the Indian market," said Rathi.
"Shree Digvijay’s plants are in Gujarat, where we already have Ultratech’s units. Moreover, Shree Digvijay’s capacity of about one million tons per year is not significant," said Rathi.
He added that the expansion of Grasim’s cement business will be enough to meet demand in the Indian market. "At present, we have a market share of 30%. We want to build on this," Rathi said.