Grasim to set up Rs1,000-crore VSF project, demerge cement business

Aditya Birla group company Grasim Industries will set up a greenfield viscose staple fibre (VSF) plant at Vilayat in Gujarat involving investment of Rs1,000 crore.

The plant will have a capacity to produce 80,000 tonnes of VSF - a man-made bio-degradable fibre with characteristics of cotton - a year, a company release said.

Most of the requisite permissions for the plant have been received and commercial production is expected to commence in FY13. This will reinforce Grasim's position as a world leader in VSF, the release added

The boards of directors of Grasim Industries Limited and Samruddhi Cement Limited, a wholly owned subsidiary of Grasim, in their respective meetings held today, also approved a proposal to demerge the cement business of Grasim into Samruddhi.

Samruddhi will issue one new equity share to Grasim shareholders for every equity share they hold in Grasim, in addition to their existing Grasim shares. On completion of the demerger, Grasim shareholders will directly hold 35 per cent of Samruddhi, and Grasim's stake will be diluted to 65 per cent. Samruddhi is proposed to be listed after the Scheme is made effective.

Meanwhile, Samruddhi is pursuing onward consolidation of the cement business will make a formal consolidation proposal to the board of directors of UltraTech Cement Limited.