Synopsis:- With a Rs.3,094 crore capex approval for Phase II Lyocell expansion at Harihar, Karnataka, Grasim Industries has set the stage for a substantial shift in its specialty fiber mix, and by 2030, total cellulosic staple fiber capacity is expected to cross 1 million tonnes annually, placing it among the largest Lyocell producers anywhere in the world.
A leading diversified conglomerate is doubling down on sustainable fibers, committing fresh capital to expand Lyocell capacity at its Karnataka facility. The move builds on a project already under construction at the same site and is part of a longer push to grow its specialty fibre portfolio and strengthen its position in the global man-made cellulosic fibre market.
With a market capitalization of Rs. 210,585 crore, the shares of Grasim Industries were trading at Rs. 3,094 per share, with a 52-week range of Rs. 3,197 to Rs. 2,502. It is trading at a P/E of approximately 43.32.
Capex Update
The Phase II expansion will be built in two lines of 55,000 TPA each. The first line is expected to be commissioned by mid-2028, and the second by mid-2030. Combined with Phase I, currently under construction with a commissioning target of mid-2027, Grasim’s total Lyocell capacity will reach nearly 210,000 TPA on completion. That number would put it among the largest dedicated Lyocell producers globally.
The financing is pegged as a mix of internal accruals and borrowed funds, deployed in tranches over the four-year construction window. At 97 percent capacity utilization on its existing 890,000 TPA cellulosic staple fiber base in FY26, the company clearly has little headroom on current assets, making the timing of the expansion logical rather than opportunistic.
Why Lyocell, Why Now
Lyocell is a third-generation cellulosic fiber, made through a closed-loop solvent process that recycles over 99 percent of the chemicals used. Compared to conventional viscose, it requires less water, produces fewer effluents, and delivers better tensile properties, making it a natural fit for premium apparel, home textiles, and technical end-uses where both performance and sustainability credentials matter to buyers.
Global textile brands have been actively shifting their sourcing toward man-made cellulosic fibers with lower environmental footprints. Grasim’s move is a bet on capturing a larger share of that demand shift from a manufacturing base in India, rather than leaving the premium tier of the MMCF market to Austrian and Chinese producers.
By 2030, the company targets specialty fibers Lyocell, Modal, dope-dyed, and recycled variants at 35 percent of its total fiber portfolio. That’s a meaningful change in product mix and, in theory, a margin-accretive one: specialty fibers command premiums over standard viscose, and building scale domestically also reduces India’s current dependence on imported Lyocell.
Business Overview
Grasim Industries Limited, incorporated in 1947 and listed on both BSE and NSE, is the flagship of the Aditya Birla Group. On a standalone basis, its core operations span cellulosic fibers, caustic soda, specialty chemicals, and rayon-grade wood pulp. Consolidated operations include UltraTech Cement, Aditya Birla Capital, and the nascent Birla Opus paints business.
For Q4FY26, the company delivered its highest-ever quarterly revenue of Rs.51,101 crore, registering a 15% YoY growth, driven by strong performance across cement, chemicals, cellulosic fibers, paints, and financial services businesses. EBITDA increased 22% YoY to a record Rs.8,011 crore, reflecting scale benefits, operational efficiencies, and improved profitability across segments. Net profit surged 28% YoY to Rs.3,802 crore.
For the full year FY26, consolidated revenue rose 18% YoY to Rs.175,431 crore, while EBITDA grew 29% YoY to Rs.25,872 crore and PAT increased 33% YoY to Rs.10,300 crore, highlighting the company’s strong execution, diversified growth engines, and improving earnings profile.
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