The Aditya Birla group today announced formation of a joint venture with Hubei Jing Wei Chemical Fibre Company of China.
The group will pick up 70 per cent stake in the joint venture, while the remaining 30 per cent will be with the Chinese viscose staple fibre company.
Birla Jingwei Fibres Company - the JV - will acquire the assets of Jing Wei, which has VSF production capacity of 30,000 tonne per annum.
The Birla group will chip in $70 million (nearly Rs 330 crore) for the 70 per cent stake acquisition. The JV will deploy this investment in doubling its capacity to 60,000 tpa in a year.
While Grasim Industries will pick up 30 per cent stake in Birla Jingwei Fibres, the remaining 40 per cent stake will be held by two other celluosic fibre firms of the group - Thai Rayon Public Company and P T Indo Bharat Rayon.
The announcement pulled the Grasim stock up to day's high of Rs 2,290 in a strong Mumbai market today. The stock finally settled at Rs 2,276.30 on the BSE, 1.04 per cent higher than previous day's close at Rs 2,252.90.
In a media statement, Aditya Birla group Chairman Kumar Mangalam Birla said the group's intention was to grow even further globally in the viscose staple fibre industry.
"Moreover, the Asian and Chinese markets offer enormous potential for commodity and speciality fibres, in both of which our group has strong foundation," he added. The Birla group is the leader in the VSF segment globally.
S K Jain, director, Aditya Birla Management Corporation, said: "The group will introduce the world-class manufacturing practices and marketing experience in the JV to ensure high production quality and market penetration."This is the second JV of the Birla group in China. Three years ago, it had set up Liaoning Birla Carbon through its Thai Carbon Black Company and China's Dashiqiao Ronghua Chemical. Lioning has a carbon black making capacity of 50,000 tpa.