2013
PROJECT REPORT ON VISCOSE STAPLE FIBER
RANEESH AJMERA STANDARD CHARTERED 16/05/2013
List of Contents CONTENTS 1.Abstract ................................................................................................................................................................................... 4 2.Viscose Staple Fiber............................................................................................................................................................ 6 2.1.Meaning of Viscose Staple Fibers ........................................................................................................................... 6 2.2.Properties ......................................................................................................................................................................... 8 2.3.Process .............................................................................................................................................................................. 9 2.4..Historical View ........................................................................................................................................................... 11 3.Indian VSF industry......................................................................................................................................................... 13 3.1 Introduction ................................................................................................................................................................... 13 3.2.EXPORTS ..................................................................................................................................................................... 14 3.3.Industry Entry Barriers .............................................................................................................................................. 15 3.4.CAPACITY ................................................................................................................................................................... 16 3.5.VSF Domestic Demand ............................................................................................................................................. 17 3.6.TRENDS IN USAGE................................................................................................................................................. 18 3.7.ISSUES OF VISCOSE INDUSTRY IN INDIA ............................................................................................... 19 3.8.ALTERNATE RAW MATERIALS ..................................................................................................................... 20 3.9.Viscose fiber industry technology development direction ............................................................................. 21 3.10.Price............................................................................................................................................................................... 22 3.11.Key enterprises .......................................................................................................................................................... 23 4.Grasim Aditya Birla Group .......................................................................................................................................... 24 4.1.Introduction................................................................................................................................................................. 24 4.2.Grasim VSF Global presence .................................................................................................................................. 26 4.3.Quarterly Analysis OF Grasim ............................................................................................................................... 27 4.4.Grasim in India............................................................................................................................................................. 28 4.5Grasim Joint Ventures (JV) ....................................................................................................................................... 29 4.6.Research and development of Grasim .................................................................................................................. 33 5.Viscose Staple Fiber Products ...................................................................................................................................... 37 6.Future of VSF...................................................................................................................................................................... 38 7. Conclusion ........................................................................................................................................................................... 42 2
7. Bibliography ....................................................................................................................................................................... 43 8.ACKNOWLEDGEMENT ............................................................................................................................................. 44
3
1.ABSTRACT The first ten years of the 21st century have witnessed a resurgence in the global viscose fibre industry as production has continued to increase, following a trend first evident in only some regions of the world during the latter part of the 1900s. In the late 20th century however, the regional upward trend, which was driven by the developing industry in Asia, was masked by the more significant and frequent closure of older, less environmentally friendly plants in the western world, particularly in Eastern Europe. Now, at the end of the first decade in the 21st century with that programme of plant closures effectively finished, the previously obscured underlying trend has become clear (Figure 1). The net result of the two opposing trends in Asia and East Europe towards the end of the 20th century was an overall net decrease in global manufacturing capacity of around 600 kt, to approximately 2.0 million tones by the year 2000. During this time, more than 800 kt of capacity was lost in Eastern Europe with a further 300 kt closing in West Europe and other smaller losses recorded in Japan and North America. However, at the same time capacity in China was increasing by more than 400 kt with a similar increase occurring in South and Southeast Asia. So, whilst the global headline figure was suggesting a decline in capacity with all the connotations of an industry in terminal decline and the associated negative public perception, a closer examination of the situation revealed an industry which far from dying was in reality growing significantly, particularly in Asia. By the end of the first decade of the 21st century, closures of viscose staple plants had slowed almost to zero and the underlying growth pattern had become much clearer. In fact, during the first ten years of the 21st century global viscose staple capacity increased by around 1.5 million tones (an average of 7.7 % per annum) to more than 3.5 million tones, an all time record high. At the same time, production of viscose staple also increased, albeit at the more modest average pace, of 6.7 % per annum. Increased capacity in the industry was driven by the strengthening global demand for viscose staple, not only in textile 4
applications concentrated mostly in Asia, but also in the more technical demanding and fast expanding nonwovens industry concentrated in the West where viscose staple is the preferred fiber in many applications including wet wipes, hygiene products and surgical applications. Thus, long gone is the once popular perception that viscose staple is a cheap filler fiber to be found only in budget priced apparel. It is now in demand for the positive contribution it makes to the finished product whether that be in the more traditional textile industry or in nonwoven applications. Indeed, the old textile mills of Eastern Europe which traditionally produced large quantities of low grade textile materials mainly for domestic consumption have long since given way to the new highly automated and in many cases vertically integrated textile conglomerates located chiefly in Asia. It is no surprise therefore that high grade fibre making capacity has migrated to those markets where the textile industry has been growing fastest. Whilst the rapid increase in capacity has been taking place in Asia, viscose staple producers in the West have taken stock and become stronger and better able to cope with competition from the newer low cost producers. Today many of the remaining producers outside Asia are reaping the benefits of decisions taken in the latter part of the 20th century to move production away from commodities towards specialty products. The continuing trend towards research driven developments of new fibre variants offering a wide range of properties to the market place is set to continue indeed survival of the industry in West Europe and elsewhere depends an innovative approach. Never has the saying been truer than it is now today‟s specialty is tomorrows commodity.
5
2.VISCOSE STAPLE FIBER 2.1.MEANING OF VISCOSE STAPLE FIBERS Fibers made by chemical treatment of natural cellulose. Depending upon the intended use, viscose fibers are made into textile or cord threads, as well as staple fiber. The manufacturing process is composed of the following basic technological operations: making the spinning solution (viscose), forming the threads by the wet method, and trimming and drying them. Fabrics of viscose fibers are easily dyed and have excellent hygienic properties (hygroscopicity), which is especially important in goods made for popular use. The accessibility of raw materials and the low cost of the chemical reagents, as well as the satisfactory textile properties and broad possibilities for modification, ensure that viscose fibers are economical to produce and widely used. The shortcomings of viscose fibers are great loss of durability when wet, tendency to wrinkle, insufficient resistance to friction, and a low degree of elasticity, especially when wet. These shortcomings can be rectified by modification. Modified viscose fibers (for example, polynose fibers) have greater durability when dry and wet (durability loss when wet is 20-25 percent, as against 40-50 percent in ordinary viscose fibers), great resistance to wear, and increased elasticity. Twisted-spatula viscose fibers have more stable winding, which simplifies their combination with natural fibers in manufacturing threads. The tendency of viscose fibers to wrinkle can be diminished by further treatment with various compounds. In the manufacture of popular goods viscose fibers are widely used for treating silk and staple fabrics, knitted goods, and fabrics for various uses made from combinations of viscose fibers with cotton or wool, as well as with other synthetic fibers. Highly durable viscose cord fiber is 6
used for a wide variety of technical goods. For example, replacing cotton cord in tires with highly durable viscose cord increases the life of the tire and decreases the amount of rubber needed for its manufacture. In 1968 world production of viscose fibers was 3,103,400 tons (42.6 percent of the general output of chemical fibers). Industrial production of viscose fibers began in England in 1905.
7
2.2.PROPERTIES Features of VSF
Traits description VSF performance is close to natural Cotton fiber, has good moisture absorption, air permeability, dyeability,
Excellent perforantistatic, and soft texture, particularly moisture absorpmance tion and air permeability, synthetic fiber cannot compare with it. The characteristic of synthetic staple fibers, VSF also Good functional had too. Gloss, chromatography, heat, corrosion of VSF characteristics
are much better than synthetic, so fabric that made by VSF are beautiful colors and hanging dynamic. GlVSF is biomass fiber, its waste can be naturally de-
Obvious environgraded, and it would not cause the second pollution, mental advantages environmental advantages are obvious. Cotton linter, wood, bamboo and hemp, that renewable, recyclable agriculture and forestry resources are main Strong material raw material for VSF, sustainability of VSF is more exrenewable celling than synthetic fiber that extract non-renewable petroleum as the raw material.
8
2.3.PROCESS The process is as follows: 1. Cellulose: Production begins with processed cellulose 2. Immersion: The cellulose is dissolved in caustic soda: (C6H10O5)n + nNaOH → (C6H9O4ONa)n + nH2O 3. Pressing: The solution is then pressed between rollers to remove excess liquid 4. White Crumb: The pressed sheets are crumbled or shredded to produce what is known as "white crumb" 5. Aging: The "white crumb" is aged through exposure to oxygen 6. Xanthation: The aged "white crumb" is mixed with carbon disulfide in a process known as Xanthation, the aged alkali cellulose crumbs are placed in vats and are allowed to react with carbon disulfide under controlled temperature (20 to 30 °C) to form cellulose xanthate: (C6H9O4ONa)n + nCS2 → (C6H9O4O-SC-SNa)n 7. Yellow Crumb: Xanthation changes the chemical makeup of the cellulose mixture and the resulting product is now called "yellow crumb" 8. Viscose: The "yellow crumb" is dissolved in a caustic solution to form viscose 9. Ripening: The viscose is set to stand for a period of time, allowing it to ripen: (C6H9O4O-SC-SNa)n + nH2O → (C6H10O5)n + nCS2 + nNaOH 10.Filtering: After ripening, the viscose is filtered to remove any undissolved particles 11.Degassing: Any bubbles of air are pressed from the viscose in a degassing process 12.Extruding: The viscose solution is extruded through a spinneret, which resembles a shower head with many small holes 13.Acid Bath: As the viscose exits the spinneret, it lands in a bath of sulfuric acid, resulting in the formation of rayon filaments: (C6H9O4O-SC-SNa)n + ½nH2SO4 → (C6H10O5)n + nCS2 + ½nNa2SO4 14.Drawing: The rayon filaments are stretched, known as drawing, to straighten out the fibers 9
15.Washing: The fibers are then washed to remove any residual chemicals 16.Cutting: If filament fibers are desired the process ends here. The filaments are cut down when producing staple fibers
10
2.4..HISTORICAL VIEW The viscose fibre industry is the oldest man-made fibre business in the world with its roots stretching back to the late 19th century, although commercial production did not begin until 1905 when Courtauld opened its first filament plant. Initially the industry enjoyed a period of substantial growth which was followed by an equally dramatic decline in the face of competition from the newer synthetic fibers. However, in more recent times the industry has shown signs of recovery, driven primarily by the commissioning of new plants in Asia. At the same time some factories in the western world and elsewhere have struggled to compete, with many closing down and others running at reduced capacity utilization. This paper highlights developments in the latest chapter of the global viscose fibre industry by examining the regional changes that have taken place during the first ten years of the 21st century. It shows that far from being in decline, the viscose fibre business is in a healthy state with annual average growth rates exceeding many other fibres including polyester staple. Viscose was the first man made fiber introduced in textile production. Viscose has excellent properties that can be engineered and optimized for different textile and nonwoven applications. The name was adopted in 1924, in preference to „artificial silk‟, by the U.S. Dept. of Commerce and various commercial associations. As early as 1665 the English naturalist Robert Hooke had suggested the possibility of making artificial silk, but the first artificial textile fiber was produced in 1884 by a French scientist, Hilaire de Chardonnet, and was manufactured by him in 1889. Unpopular at first because it was too lustrous and laundered poorly, it has been steadily improved. Cellulose, originally from cotton linters but now chiefly from wood pulp, washed, bleached, and pressed into sheets, is dissolved by chemicals, then forced under pressure through minute holes in a metal cap (spinneret), emerging as filaments that unite to form 11
one continuous strand solidified by passage through a suitable liquid or warm air. The spinning solution may be forced through a larger orifice or slit to produce a monofilament, a ribbon, or a sheet. Filaments are doubled and twisted into smooth, silk-like yarns or cut into staple lengths and spun. Spun rayon can be treated to simulate wool, linen, or cotton.
12
3.INDIAN VSF INDUSTRY 3.1 INTRODUCTION Viscose IS the first man made fibre to be produced in India . Viscose fibre production is mainly concentrated In Asia which contributes to more than 51% of the world production. The major players in Viscose fibre production are China, India, Indonesia, Taiwan, Germany, Austria etc. India Stands as one of the major Producers of Viscose staple fibre. There are only two players in India, namely Grasim Industries Ltd and SIV industries Ltd. Grasim Industries commenced production from 1954 and SIV Industries Ltd in 1961, From a modest beginning of about 50,(„000)Mtons per annum of Man made Fibre & Filaments in India, it has grown over a period & in „94.„95, it has recorded production of 887(„000) Mtons which is nearly 17 Times growth. This fibre was initially expected to be a replacement for cotton. However, with the market trends & changing fashion, Pure Viscose spun yarn fabrics are being popular and “Erode” in South India is the hub of Pure Viscose weaving and processing. Fabrics produced will find usage in printing & dyeing for various end uses. In 70‟s when there was an acute shortage of cotton, the Government of India made it compulsory that at least 10% of Viscose should be blended with cotton. India being a tropical country, with the arrival of Polyester, Viscose friends a blending Partner and Polyester-Viscose which IS unique to India has found innumerable usage in Suiting, Shirting‟s and Dress materials. With the rapid developments of Viscose market , in the present Situation, Viscose has been recognized as a fibre by itself and in India Viscose is no longer dependent on the up and downs of Cotton Market.
13
3.2.EXPORTS Viscose spun yarn and the fabrics made thereof, forms an important Segment in export earnings of India. Pure Viscose spun yarn exports which was Rs. 200 million in („90-„91) has shown a remarkable increase of 7 times to Rs. 1400 million (40million US $) in („95‟96). During the same period, Polyester- Viscose Yarn has increased from Rs.293 million to „Ps. 2040 million. (58 million US $). The export of fabrics made of Viscose spun yarn and polyester/viscose spun yarn has also been steadily increasing and in the year („94.„95) the export of the above fabrics accounted for Rs.2502.3 million (71.49 million US$). In India, there is a good potential in improving the export of Viscose based items and with the encouragement form the Government of India, heavy capital investment in spinning, weaving, processing and garment manufacture, the exports will scale new heights.
14
3.3.INDUSTRY ENTRY BARRIERS The VSF industry continue s to remain highly concentrated due to the following reasons : New players were unable to enter the industry in the 1980s due to government licensing issues. In the 1990s, no new players set up capacities, given the stringent environmental laws and conditions that the new VSF plants had to confirm to . Any new entrant needs to make arrangements for adequate and reliable supply of wood pulp. Arrangements would have to be either through captive facilities or long term import contracts.
15
3.4.CAPACITY The past few decades has witnessed predominant use of natura1 cellulose from wood pulp to create a very wide range of Viscose fibre. India accounts for nearly 10% of the World VSF Capacity. At present installed capacity in India is 223.9 („000) M Tons per annum with M/s.Grasim Industries Ltd having an installed capacity/ of 184.9 („000) M Tons per annum worth plants at Nagda ,Harihar & Mavoor. MIS. SIV Industries Ltd with an installed capacity of 38.95 („000) MTons per annum accounts for 18% of India‟s Capacity and the plant is located at Sirumugai in Tamil Nadu, South India. Both the manufacturers have ambitious expansion programmes. The total capacity in India is Likely to reach a level of 338.2 („000) Mtons per annum by 2000 AD. The demand for Viscose is increasing year after year due to its specific properties like high absorbency & better dye up-take. Capacity and Production Trends (Million kg) 400 350 300 250 Capacity
200
Production 150 100 50 0 2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Source: Crisil Research
16
3.5.VSF DOMESTIC DEMAND Demand Analysis and growth rate of past years
Demand 300 250 200 150
Demand (in million kg)
100 50 0 2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Growth Rate (in per cent) 25 20 15 10 5
Growth Rate (in per cent)
0 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 -5 -10 -15
Source: Crisil Research and Industry
17
3.6.TRENDS IN USAGE Viscose Staple Fibre produced in India finds outlet in pure spinning which is converted into fabrics for both dyeing and printing qualities and is characterized by ease of dyeing, good absorbency, rich and full dying properties and is mainly exported. Viscose, as an excellent fibre for blending has an outstanding future both in clothing and increasingly In the Nonwoven and hygiene sectors. In blended yarns, viscose staple fibre is popular in Polyester blends. This is mainly because of the hygroscopic property of Viscose and its clean nature. It also has the advantage of staple tut length and ease in spinning on cotton spinning System. Hence, viscose will serve as a major complementary fibre. Although the non woven Segment imports infancy in India. there will be a demand for absorbent fibres in various field& of nonwoven like personal hygiene, wipes, medical applications, disposables and filter industry Quality has become an increasingly important distinguishing feature. Recently, there is a rise in manufacture of fine denier fibres. The Change In market behavior In the fine denser area exerts a direct influence on process control in viscose manufacture. Parallel to the development in the synthetic fibre area, the shift of market shares in favor of finer deniers in the recent past took place at an extreme Speed. This represents a threat which is explained by the decrease in linear production on one hand and on the other hand, the sensitivity of fine denier fibres towards production process leading to drop in quality. This has prompted manufacturers to narrow the process Parameters and maintain effective process control using electronic control devices.
18
3.7.ISSUES OF VISCOSE INDUSTRY IN INDIA Viscose Industry is basically highly capital Intensive and this makes it unviable for new entries and hence makes expansion more sensible. The capital cost in India is very high and the rising cost of production makes it difficult to gain foot hold in the international market. The cost of energy is high due to low plant load factor and excessive transmission losses. Pulp cost is another major cost component which leaves the manufacturers with no other Option but to modify the infrastructure and technology to suit the location for feasibility and attain competitive edge. The Problem of pollution in Pulp and Viscose industry needs to be analyzed carefully since the pollution control is highly capital intensive and also results in high running cost. In India, the Problem of pollution are well recognized and the manufacturers are making large investments in this direction. India is carefully watching the latest developments in solvent spinning technology and very soon, manufacturers may opt for this based on the viability.
19
3.8.ALTERNATE RAW MATERIALS Since the beginning of Viscose manufacture, renewable forest wood such as Eucalyptus, Pines Paula, Wattle and Bamboo has been the major raw material for wood pulp manufacture in India. Non availability and high costs have prompted producers to look for alternatives, There is considerable head way in using green jute and Biogases as a substitute for wood. These are agricultural or industrial byproducts and India being the second largest Producer of Jute, there is abundant availability Use of these raw materials also prevents deforestation and hence aids in preserving ecology. Trials in developing hybrid varieties of eucalyptus grown in the plains have also been successful.
20
3.9.VISCOSE FIBER INDUSTRY TECHNOLOGY DEVELOPMENT DIRECTION With the development of science and technology of modern society and people return to nature and environmental awareness enhancement, viscose fiber with its complete varieties, excellent properties, more and more application industry and consumers. Its application scope has been expanded from traditional industries to clothing, adornment, health and industrial products etc. But viscose fiber production with other chemical fiber production, there exist the problems of environmental protection. In addition, viscose process of production equipment and also too multifarious, the equipment investment is high. Therefore only in solving these problems, under the premise of viscose fiber industry can more quickly to develop healthily. Viscose fiber industry technology development direction of roughly can be summarized as the following several aspects: (1) reduce the pollution of the environment, development of new spinning cellulose fiber manufacturing system. (2) production process rationalization and optimization. (3) strengthen the basic theories of viscose fiber. (4) the development of new technology, expand the pulp pulping sources of the raw materials. (5) to improve the existing fibers with special performance, the development of new varieties.
21
3.10.PRICE Price of Viscose Staple Fibre were on an upward trend since the start of 2010-11,backed by rising wood pulp prices and supplemented by firm cotton prices. Although high prices dented the domestic demand for VSF in 2010-11, manufactures kept prices firm, drawing support from an unprecedented rise in cotton prices . VSF prices reached an all time high of ₹ 155 per kg in 2011 Viscose staple fibre market followed a downward trend and prices went down due to sluggish demand from the downstream market in the Chinese domestic market. Viscose staple fibre market remained weakened due to sluggish market outlook during the second half. Viscose staple fibre prices moved down triggered by the rumors about low price product availability in the market during the period.
VSF Price Per Kg 180 160 140 120 100 80
VSF Price Per Kg
60 40 20 Mar-13
Nov-12
Jul-12
Mar-12
Nov-11
Jul-11
Mar-11
Nov-10
Jul-10
Mar-10
Nov-09
Jul-09
Mar-09
Nov-08
Jul-08
Mar-08
0
22
3.11.KEY ENTERPRISES Sr.No.
Name of the Company
City
1
Grasim Aditya Birla Group
2 3 4 5 6 7 8 9 10
Ugan Impex Limited Everyflow Petrofils Limited Orange Yarns Ridhi Fibres Rameshwar Textiles Raj International Limited Lenzing Modi Fiber India Pvt Limited Century textile and Industry Limited Hanung Toys and Textiles Ltd.
Mumbai,Nagda, Harihar,Kharach Surat Mumbai Surat Amritsar Surat Surat Mumbai Mumbai Mumbai
23
4.GRASIM ADITYA BIRLA GROUP
4.1.Introduction Grasim Industries Limited is a global leader in viscose staple fibre and ranks among India's largest private sector companies with a consolidated net revenue of Rs.216 billion and consolidated net profit of Rs.22.8 billion "(FY 2011). starting as" a textiles manufacturer in 1948, Grasim's businesses today comprise viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement, which contribute over 90 per cent of its revenues and operating profits at a consolidated level. The Aditya Birla Group is the world's largest producer of VSF, commanding a 21 per cent global share. Grasim, with an aggregate capacity of 333,975 tpa has a global share of 11 per cent. It is also the secondlargest producer of caustic soda (which is used in the production of VSF) in India. As a result of restructuring in FY 2010 and FY 2011, the cement business has been consolidated with Grasim's subsidiary, UltraTech Cement Limited. UltraTech has a capacity of 52 million tpa and is a leading cement player in India and eighth largest in the world. Grasim has a strong presence in fabrics and synthetic yarns in India through its subsidiary, Grasim Bhiwani Textiles Limited, and is well known for its branded suiting‟s, Grasim and Graviera, mainly in the polyester-cellulosic branded menswear. Its textile plants are located at Bhiwani (Haryana) and Malanpur (Madhya Pradesh). 24
Global Fiber Pie
Cotton VSF Synthetic Raw wool Others
Source: Fiber Organon
Global Market Share of VSF
Chinese Lenzing Grasim Others
Source : Company Estimates 25
4.2.GRASIM VSF GLOBAL PRESENCE Canada 3 pulp plants in joint venture Sweden Domsjo Pulp Plant Turkey Fiber Plant under Planning China,Hubei Fibre plant (72 KTPA) in joint venture India
3 fibre plants Pulp plant Caustic soda plant One fibre plant and caustic soda plant under construction.
South East Asia 2 Fiber plants of Group Co. of 338k TPA Wood Plantation at Laos (under progress)
26
4.3.QUARTERLY ANALYSIS OF GRASIM (Viscose Staple Fiber Industry) Particulars Capacity (TPA) Production (MT) Sales Volume (MT) Net Reveneue ( ₹crores) Realisation (₹/MT)
Q1 333975 83516 78959 1082 124689
2012-13 Q2 333975 84233 78215 1985.1 128499
Q4 333975 83349 94904 1227.9 144962
2011-12 Q3 352225 79798 85312 1164 169462
Q2 352225 88297 78579 1030 189462
SOURCE: Quarterly Reports of Grasim
27
4.4.GRASIM IN INDIA Grasim's VSF plants are located at Nagda in Madhya Pradesh, Kharach in Gujarat and Harihar in Karnataka, with an aggregate capacity of 352,225 tpa. Nagda Nagda is its largest unit producing a wide range of VSF to suit customer requirements in terms of length, denier and colour and also second and third generation fibres like Modal, Excel and Solvent Spun fibres, respectively. Nagda is also the largest producer of spun-dyed specialty fibre in the world. Harihar The Harihar unit houses facility for manufacture of both VSF and rayon grade pulp, the basic raw material for VSF. The company's Rayon Grade plant was the first in India to use totally indigenous wood resources with in-house technology for producing rayon pulp with an innovative oxygen bleaching process to reduce the use of chlorine. Kharach The VSF plant at Kharach, set up in 1996, employs the most modern technology giving it a competitive edge in the export market.
28
4.5GRASIM JOINT VENTURES (JV) Grasim has the following joint ventures overseas: AV Cell Inc. and AV Nackawic Inc. in Canada: AV Cell and AV Nackawic supply dissolving grade pulp to the Group‟s VSF units in India, Thailand and Indonesia. Aditya Birla Group today informed that it has increased its stake from 75 per cent to 95 per cent in the two joint venture companies in Canada viz. AV Cell Inc. and AV Nackawic Inc. at a total consideration of around Canadian $ 9 million. The Group has acquired the additional 20 per cent stake in these two companies from Tembec Group, its joint venture partner in these entities. While Grasim Industries Ltd. has acquired the additional stake in AV Cell Inc. increasing its holding in AV Cell from 25 per cent to 45 per cent, PT Indo Bharat Rayon Indonesia, has acquired the additional 20 per cent stake in AV Nackawic. Domsjö Fabriker AB in Sweden: Grasim acquired one-third stake in Domsjö Fabriker AB, a leading Swedish speciality pulp and bio-refinery company in June 2011. With this acquisition, Grasim is assured of high-quality dissolving grade pulp. During the year 2011, your Company acquired a 1/3rd stake in Aditya Group AB, Sweden, which controls Domsjo Fabriker AB, Sweden ("Domsjo"), a leading manufacturer of specialty pulp used in the manufacture of Viscose Staple Fibre (VSF). The acquisition will ensure supply of high quality dissolving grade pulp for your Company's VSF projects.
29
AV Terrace Bay Inc. in Canada: In line with the strategy to secure key inputs, Grasim acquired assets of Terrace Bay in July 2012 in JV with Thai Rayon, a Group company. This will help in meeting the increasing pulp requirement for VSF business after the mill is converted into a dissolving grade mill. Grasim Industries has acquired Canada‟s Terrace Bay Pulp for around $300Mn. Grasim will utilize Terrace Bay 285,000 tonnes of paper grade pulp capacity by converting into rayon grade pulp that can be used by Grasim for its viscose staple fibre operations. Initially, the group will invest $110Mn and would make further investment of $250 Million in phases. Grasim Industries would acquire 40% in a special entity created for this acquisition, while the rest would be held by Thai Rayon Public Company Ltd. The Terrace Bay Pulp mill, owned by Buchanan Forest Products, has been shut for the past two months. The promoters have been trying to sell the company due to liquidity crunch. Incorporated in 1948 by Kimberly-Clark Corporation, Ontario based Terrace Bay Pulp mill is capable of producing various blends of northern bleached softwood kraft pulp and northern bleached hardwood kraft pulp, together with certain other byproducts. Neenah Paper acquired the mill from Kimberly-Clark in 2004. Currently Terrace Bay Pulp is a wholly-owned subsidiary of Lucky Star Holdings Inc. of Buchanan Group. In 2006, the Buchanan Group acquired the mill from Neenah Paper. The mill has two full integrated pulp lines, and three integrated pulp machines, with a rated capacity of approximately 550,000 air-dried metric tonnes of pulp per year (hardwood and softwood combined).Incorporated as a textiles manufacturer in 1948, Grasim's businesses comprise viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement, which contribute to over 90% of its revenues and operating profits.
30
Birla Lao Pulp & Plantation Limited in Laos: To further strengthen the backward integration in pulp, Birla Lao has been formed as a JV with other associate companies for raising captive plantations at Laos. This will provide a low cost source for wood to meet future requirements of a green field pulp plant in due course of time. The Aditya Birla Group to invest US$ 350 million for plantations and pulp plant in Laos The Aditya Birla Group today announced an investment of US$ 350 million in Lao People's Democratic Republic (Laos) for setting up of a project to raise pulp wood species plantations and a pulp plant for its viscose staple fibre (VSF) business. Grasim Industries Limited, India, Thai Rayon Public Co. Ltd., Thailand, and PT Indo Bharat Rayon, Indonesia — all of whom belong to the Aditya Birla Group — will invest in this project as equity holders. The Group has 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 project is to be implemented in two phases, first the plantation phase and second, the setting up of the dissolving pulp plant, given that 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, i.e., the seventh year. The pulp produced in Laos would be exported to the Group's rayon fibre manufacturing units in India, Thailand and Indonesia, as well as newer locations.
31
Birla Jingwei Fibres Company Limited in China: Through Birla Jingwei, Grasim has its footprint in China, the largest VSF market globally. Plant capacity was doubled in 2012 and currently the capacity is 72,000 TPA. This spread and scale of operations make the Group's VSF operations very cost competitive. Moreover, vertical integration into manufacturing of rayon grade pulp and horizontal integration into production of principal raw material required for VSF production, namely, caustic soda, intermediate inputs namely CS2, sulphuric acid along with captive power and steam generation facilities, further enhance its competitive edge.
32
4.6.RESEARCH AND DEVELOPMENT OF GRASIM Grasim has established a very strong research and development (R&D) base covering different stages of the value chain. Grasim Forest Research Institute, Harihar is involved in R&D of forestry. Birla Research Institute for Applied Sciences (BRI), Nagda is involved in the development of different generations of cellulosic fibres. Textile Research Application Development Centre (TRADC) at Kharach, a NABL accredited laboratory, is involved in addressing R&D related to downstream textile value chain comprising various fibres, yarns, processing, garments, etc. With the capability to offer the entire range of cellulosic fibre under the umbrella brand of “Birla Cellulose”, Grasim has positioned itself as a dependable supplier of cellulosic fibres for “Feel, Comfort and Fashion” across global markets. To penetrate into niche market segments and to grow further, the division has ventured into the production of high performance viscose fibres aptly named Viscose Plus, High Wet Modulus Fibres (Modal) and new generation Solvent Spun Fibres and Birla Excel. Grasim is also the largest producer of Sodium Sulphate, a by-product of VSF manufacture. This chemical is widely used in the paper and pulp, detergent, glass and textile industries. Efforts to consolidate pole position in the VSF business where Grasim enjoys leadership status continue. Through a Greenfield project at Vilayat (Gujarat) - 12,000 TPA and Brownfield expansions at Harihar (Karnataka) - 36,500 TPA, Grasim intends to benefit its leadership position. Collectively, these project will ramp up capacities by 50 per cent to 498,000 TPA.
33
Capacities at a glance: Division Viscose Staple Fibre (VSF) Joint venture :: Birla Jingwei Fibres Company Limited Rayon grade pulp :: Harihar, Karnataka Joint ventures AV Cell Inc (Atholville, New Brunswick in :: Canada) AV Nackawic Inc. (Nackawick, New :: Brunswick in Canada) :: Domsjö Fabriker (Sweden) AV Terrace Bay Inc. (North Western On:: tario, Canada)
Capacity 352,225 tpa 70,000 tpa 70,000 tpa
126,000 tpa 189,000 tpa 255,000 tpa 280,000 tpa
34
4.7.Some of the overseas top viscose staple fibre producing industries : Zhejiang Fulida CO. LTD Zhejiang Fulida CO., LTD formerly as Zhejiang Fulida Fiber CO., LTD, is a foreign-invested limited liability company since DEC 2009. The company is located at Linjiang industrial zone, Xiaoshan, Hangzhou City. Zhejiang Fulida CO., LTD, a Sino-foreign joint venture specialized in producing viscose staple fibre and differential &functional viscose staple fibre. The company also mainly involved in distribution and technical development of viscose staple fibre. Zhejiang Fulida CO., LTD, the largest viscose staple fiber manufacture in China, is recognized as a leader in the field of viscose staple fibre industry. The products are awarded as China top brand and Hangzhou famous brand. The company is one of participant in organization of viscose staple fibre national standard. Also, the company is participant for drafting Zhejiang standards of viscose (long, short) unit of energy consumption limitation and calculation method. Company takes a leading position in energy saving, environment protection, production technology and equipment, with multinomial patents for invention and utility model patent. Output and market share ranks are the first in viscose staple fibre industry area.
35
Xinxiang Bailu Chemical Fibre Group Co., Ltd Xinxiang Bailu Chemical Fibre Group Co., Ltd.(formerly Xinxiang Chemical Fibre Plant)is the one of largest enterprises specialized in textile raw material, Its total assets reach RMB 4.0 billion . The company occupies an area of more than 3.0 million square meters . Its economic profit ranks the front position among viscose enterprises in China. The main productions are centrifugal viscose rayon filament yarn , continuous viscose rayon filament yarn, viscose staple fibre, polyester, spandex of 5 series with more than 100 varieties, The company newly developed 10 items of functional fibre, such as dope clyed yarn bamboo viscose filament yarn, soya bean viscose fibre, and obtain patents more than 30 items, The production sells well in domestic market and foreign market. The trademark is “Bailu”.(“Egret”in English). The company was established in 1960 and put into production in 1965. Through more than 40 years‟ development, its annual production capacity has reached 108,000 tons, include viscose rayon filament yarn 50,000 tons, viscose staple fibre 50,000 tons, synthetic fibre 5,000 tons, spandex 3,000 tons. And the company has the biggest continuous viscose rayon yarn production line and the advanced production line for continuous polymerization, dry spinning spandex. The company has the biggest viscose rayon yarn production capacity in the world.
36
5.VISCOSE STAPLE FIBER PRODUCTS
Apparel: Accessories, blouses, dresses, jackets, lingerie, linings, millinery, slacks, sports shirts, sportswear, suits, ties, work clothes. Home Furnishings: Bedspreads, blankets, curtains, draperies, sheets, slipcovers, tablecloths, upholstery. Industrial Uses: Industrial products, medical surgical products, nonwoven products, tyre cord. Other Uses: Feminine hygiene products, baby wipes and kitchen wipes.
37
6.FUTURE OF VSF VSF consumption to gain momentum post 2013-14 Viscose staple fibre (vsf) accounts for about 10 percent of total man-0made fibre consumption in India. It is primarily used in the spinning industry to produce blended yarn and non- cotton spun yarn. End use application of VSF include suiting, shirting, knitwear, home textiles and non-woven clothes. Significant demand growth in 2013-14 led by strong exports and growing domestic demand. In 2013-14.Vsf demand (domestic and export) is estimated to increase at significant 11-12 percent mainly driven by strong export growth and gradual revival in domestic demand for blended and non-cotton fabric. During 2013-14 export are estimated to account around 30 percent of total domestic production, up from 24 percent in last year. Exports to Indonesia have significantly increased to reach above 10 million kg in 2013-14 from 1.2 million. Additionally, exports to Turkey, Pakistan, Bangladesh also expected to grow moderately. On domestic consumption front, more than 60 percent of the demand is derived by blended yarn which is consumed for blended fabric production. In 2013-14, VSF demand is expected to continue to grew at healthy pace on the back of increasing demand from quality oriented application segments like comfort fabric and home textiles. Additionally, removal of excise duty in budget in 2012-13 boost ready garments demand thereby supporting the overall fabric demand. Domestic VSF demand is expected to grow at 3-4 in 2013-14 y-oy. Further exports will continue to grow as a result of increasing demand from processing hubs like Turkey and Bangladesh 38
600
500
400 Export
300
Domestic 200
100
0 2006-07
2011-12
2012-13
2013-14(E)
2017-18(P)
Domestic demand estimated to be moderate in 2013-14(“million kg‟) E: Estimated, P: Projected Source: TXC India
Growing demand from quality application will drive VSF demand Prevailing economic uncertainties and weak domestic demand resulted in subdued growth of overall textile industry. However, 39
economic recovery in the global market and improving domestic demand will lead to moderate growth rates in 2013-14. On the back of improving scenario, demand from industrial and technical textiles will gather pace post 2013-14.Demand for blended and non cotton spun yarns would continue to rise over the long term, on the back of growing demand from variety of in-use applications. Consequently, domestic VSF consumption is expected to grow at a CAGR of 3-4 per cent. Exports too are expected to report a healthy annual growth rate of 12-15 per cent (2012-13 to 2017-18), repelled by rising international demand. Although, exports are expected to grow at slower pace as compared to previous 5year as a result of increasing competition from Chinese producers.
Capacity expansions to pull down operating rates from 2013-14 onwards In 2012-13 driven by high export demand and growing domestic demand industry operating rates are estimated to increase above 100 per cent.. However with scheduled commissioning of Grasim‟s Vilayat plant during Q1 FY2014 and de-bottle necking process, operating rates are expected to decline to 80 percent in 2013-14.
VSF operating rates to decline after 2012-13
40
500 450 400 350 300 250 Production
200
Capacity
150 100 50 0
E: Estimated, P: Projected
Source: TXC,India OPERATING RATE
Operating Rates (in percent) 120 100 80 60 40
Operating Rates (in percent)
20 0
E: Estimated, P: Projected
Source: TXC,India
41
7. CONCLUSION Rapid increase in demand for fibers in coming years will require major expansions in capacities of fibre production. This situation will cal1 for expansion In the man-made fibre sector as natura1 fibres may not be able to address the requirement. Synthetics will certainly grow but will require a good blending component. Viscose will have a strong Position in the future as an alternate raw material because of:
Growing demand for absorbent fibres Renewable raw material sources Biodegradability Excellent for blending Niche fibre in fashion design Excellent dyeing and comfort characteristics.
In future, the market demand for cellulosic fibre and yarn will continue to be buoyant due to the positive physical properties of the fibre. The main reason behind this being the constant increase in Viscose productivity paralleled by the reduction in average denier acting as a guarantee towards Viscose industry‟s continued important in the next century. The quality of the product and the economical production of the same and necessary measures taken regarding environmental protection will a play crucial role in the development of viable solutions for a long term. As an important raw material with unique properties, Viscose has all the necessary strengths to reign in the future in Indian Textile Industry.
42
7. BIBLIOGRAPHY o http://texmin.nic.in/policy/Fibre_Policy_Sub_%20Groups_Report_ dir_mg_d_20100608_2.pdf o http://www.researchandmarkets.com/reports/1543027/world_visco se_trends_in_demand_and_suppy_2010 o http://www.lenzing.com/fileadmin/template/pdf/konzern/lenzinger _berichte/ausgabe_81_2002/LB_2002_Kogler_02_ev.pdf o http://www.grasim.com/products/birla_viscose.htm o http://grasim.com/investors/downloads/Grasim_Q3FY1213_Presentation.pdf o http://grasim.com/investors/downloads/Corporate_Presentation_ja n13.pdf o www.fibre2fashion.com/.../viscose-staple-fibre-vsf-price-trendsindustryo www.livemint.com/.../Viscose-staple-fibre-plays-spoilsport-forGrasim-I o http://www.moneycontrol.com/news-topic/viscose-staple-fibre/ o www.adityabirla.com/Businesses/Profile/Grasim-IndustriesLimited o www.yarnsandfibers.com/.../viscosestaplefibre-vsf-price-trendsreports o http://www.dealcurry.com/BasicIndustries.htm o www.tradeindia.com/manufacturers/viscose-staple-fiber.html o http://articles.economictimes.indiatimes.com/2012-1011/news/34387516_1_chinese-vsf-vsf-division-viscose-staple-fibre
43
8.ACKNOWLEDGEMENT I take this opportunity to express my profound gratitude and deep regards to my guide Mr.Chetan and Mr.Abhinav for his exemplary guidance, monitoring and constant encouragement throughout the course of this thesis. The blessing, help and guidance given by him time to time shall carry me a long way in the journey of life on which I am about to embark. I am obliged to staff members of Standard Chartered, for the valuable information provided by them in their respective fields. I am grateful for their cooperation during the period of my assignment.
44
