Capacity Expansion

Grasim Industries Approves ₹3,094 Crore Lyocell Capacity Expansion at Haridwar; Specialty Fibre Portfolio to Reach 35% by 2030

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grasim

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Grasim Industries has approved a capital expenditure of ₹3,094 crore to undertake Phase-II expansion of its Lyocell fibre capacity at Haridwar, Karnataka. The expansion will add 110 KTPA of Lyocell capacity, taking the company’s total Lyocell capacity to nearly 210 KTPA and helping increase the contribution of specialty fibres to 35% of its portfolio by 2030.

PRICE-SENSITIVE TRIGGER

Event: Board approval for Phase-II Lyocell capacity expansion.

Type: Capacity Expansion / Capital Expenditure Approval

Impact: Positive

Immediate Effect: The approval strengthens Grasim’s specialty fibre strategy, expands its sustainable textile materials portfolio, and supports long-term growth in high-performance man-made cellulosic fibres.

Key Metrics:

Approved Capex: ₹3,094 crore
Existing CSF Capacity: 890 KTPA
Existing Capacity Utilization: 97% (FY26)
Phase-I Lyocell Capacity: 55 KTPA (under construction)
Phase-II Lyocell Capacity Addition: 110 KTPA
Total Lyocell Capacity After Expansion: ~210 KTPA
Combined Lyocell Addition at Haridwar: 165 KTPA
Specialty Portfolio Share Target: 35% by 2030

Highlight:

Grasim approved ₹3,094 crore investment to add 110 KTPA Lyocell capacity under Phase-II expansion.

What Happened ?

The Board of Directors of Grasim Industries approved a fresh investment of ₹3,094 crore for Phase-II expansion of Lyocell manufacturing capacity at its Haridwar facility in Karnataka.

The Phase-II project will establish two production lines of 55 KTPA each, adding 110 KTPA capacity. This follows the previously approved Phase-I Lyocell project of 55 KTPA currently under implementation.

Upon completion of both phases, Grasim’s total Lyocell capacity will reach nearly 210 KTPA, strengthening its position among the world’s leading Lyocell fibre producers and supporting increasing demand for sustainable textile materials.

Key Details

Lyocell Expansion Project:

Existing Cellulosic Staple Fibre (CSF) capacity stands at 890 KTPA.
FY26 capacity utilization reached 97%, indicating strong demand.
Phase-I Lyocell project of 55 KTPA is under construction and expected to be commissioned by mid-2027.
Newly approved Phase-II expansion will add 110 KTPA through two lines of 55 KTPA each.
First 55 KTPA Phase-II line is expected to be commissioned by mid-2028.
Second 55 KTPA Phase-II line is expected to be commissioned by mid-2030.
Total Lyocell addition at Haridwar across both phases will reach 165 KTPA.
Project funding will be through a mix of internal accruals and borrowings.
Expansion is intended to address growing global demand for sustainable and high-performance textile fibres.
Specialty fibre portfolio including Lyocell, Modal, Dope-dyed and Recycled fibres is targeted to reach 35% by 2030.

Note:

Lyocell is a next-generation sustainable fibre manufactured through a closed-loop production process and is increasingly used in apparel, home textiles and technical textile applications.

Risk Analysis

Summary:

The project involves phased commissioning over multiple years and remains subject to execution, demand realization and capital deployment risks.

Key Risks:

Large capital commitment of ₹3,094 crore will be deployed in phases.
Delays in commissioning could postpone capacity ramp-up and return generation.
Global fibre demand cycles may influence utilization of the new capacity.
Raw material, energy and financing costs may affect project economics.
Commercial benefits will accrue gradually as both phases become operational.

Worst Case Scenario:

Project delays, lower-than-expected demand growth or margin pressure in specialty fibres could defer expected returns on investment.

Risk Level: Medium

Company Commentary

The investment reflects Grasim’s strategy of investing ahead of demand growth in advanced fibre segments.
Management believes the expansion strengthens the company’s leadership in sustainable man-made cellulosic fibres.
The project will help Grasim cater to growing global demand for sustainable and high-performance textile materials.
Lyocell expansion is expected to improve the specialty product mix and reinforce Grasim’s position in the global fibre industry.
Management expects total Cellulosic Fibre capacity to exceed 1 million tonnes annually by 2030.

Official Exchange Filing: Grasim Industries Limited

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