Grasim - Focusing On Growth Opportunities In Core Businesses: Motilal Oswal

Motilal Oswal Report

At Grasim Industries Ltd.’s analyst meet, the management highlighted growth opportunities in core businesses, near-term challenges, strengths and market positioning, diversified chemical portfolio, sustainability initiatives and progress in high-growth businesses.

There are three basic fibers available globally – cotton, polyeste, and viscose staple. In global fiber production, the share of cotton, PSF and VSF stood at 24-26%, 65-70% and 6-7%, respectively.

Polyester is a synthetic material, which is durable and easy to maintain. However, it is not biodegradable. VSF and Cotton are used as a blend with PSF. VSF is a factory produce (made from wood pulp), a renewable and 100% biodegradable product.

Grasimis the largest VSF producer in India with a total capacity of 824 thousand tonnes per annum. Grasim’s market share in VSF stood at ~90% in India. The management expects to see a compound annual growth rate of 8-10% in VSF demand over the next 10 years. The company is also the largest producer of Viscose filament yarn in India. Grasim’s Raysil is the most popular VFY brand.

The company has leading market position in three areas of the chemical business-

1. it has a 27-30% market share in caustic soda in India which it aims to maintain;

2. it has the largest chlorine integration capacity of ~60%, which will reach to 72% post the commissioning of ongoing projects;

3. it is the largest epoxy player with more than 50% market share.

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