Rs 3,094 Crore Capex Approved: Aditya Birla Group Company Expands Lyocell Capacity; Check Details

On Tuesday, Indian equity benchmarks traded higher, with the benchmark Nifty 50 index rising 0.20 per cent to 23,169.85. Amid the positive market sentiment, Grasim Industries share price traded at Rs 3,098.20, up 1.58 per cent from the previous close, after the company approved a major capacity expansion in its specialty fibre business.

Grasim Industries Board Approves Rs 3,094 Crore Investment

Grasim Industries informed that its Board of Directors has approved a capital expenditure of Rs 3,094 crore for Phase II expansion of Lyocell manufacturing capacity at its Harihar facility in Karnataka.

The expansion will add 110,000 tonnes per annum (TPA) of Lyocell capacity through two production lines of 55,000 TPA each. The first line is expected to be commissioned by mid-2028, while the second line is scheduled for commissioning by mid-2030.

The project will be funded through a combination of internal accruals and borrowed funds.

Grasim Industries Total Lyocell Capacity To Reach 210,000 TPA

The latest approval follows the company's earlier decision in February 2025 to establish a 55,000 TPA Lyocell facility at the same location, which is currently under construction and is expected to commence operations by mid-2027.

With the completion of both Phase I and Phase II projects, the total Lyocell capacity addition at Harihar will reach 165,000 TPA.

Upon completion of the expansion programme, Grasim's overall Lyocell capacity will increase to nearly 210,000 TPA, positioning the company among the largest Lyocell producers globally.

Cellulosic Fibre Capacity To Cross 1 Million TPA

Grasim currently operates 890,000 TPA of Cellulosic Staple Fibre (CSF) capacity and reported capacity utilisation of 97 per cent during FY26.

Following the planned expansions, the company's total Cellulosic Fibres capacity is expected to exceed 1 million tonnes per annum by 2030.

The expansion is aimed at addressing growing global demand for sustainable and high-performance textile materials.

Focus on Speciality Fibre Portfolio

Lyocell is a third-generation Cellulosic Staple Fibre used in apparel, home textiles and technical textile applications. The fibre is manufactured through a closed-loop process and is known for its durability, breathability and lower environmental impact.

The expansion is also expected to strengthen Grasim's specialty fibre portfolio. The company projects the contribution of specialty products, including Lyocell, Modal, Dope-dyed and Recycled fibres, to increase to 35 per cent of its fibre portfolio by 2030.

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Management Commentary

Kumar Mangalam Birla, Chairman of the Aditya Birla Group, said the investment reflects the group's commitment to investing in sectors that will strengthen India's competitiveness and manufacturing capabilities. He further added that the expansion will support growing global demand for sustainable textile materials and help position India as a stronger participant in the global textile industry.

Vadiraj Kulkarni, Business Head, Grasim Pulp & Fibre, said the project will strengthen the company's position in the evolving Man-Made Cellulosic Fibre market and accelerate the shift towards high-performance fibres with lower environmental impact.

About Grasim Industries

Grasim Industries Ltd, incorporated in 1947, is the flagship company of the Aditya Birla Group. The company operates across Cellulosic Fibres, Chemicals, Building Materials, Paints, B2B E-commerce and Financial Services.

Grasim operates 27 manufacturing plants in India, serves customers across 79 countries and had 55 subsidiaries as of March 31, 2025.

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Disclaimer: The article is for informational purposes only and not investment advice.