MUMBAI, February 23: The Aditya Birla group has made its first takeover abroad under the leadership of Kumar Mangalam Birla. Following in the footsteps of his illustrious father Aditya Vikram Birla, the young Birla has acquired a a pulp mill in Canada.The Aditya Birla group, the world's largest producer of viscose staple fibre (VSF), has acquired A V Cell Inc, a 1.10 lakh tonnes per annum pulp mill in New Brunswick, Canada, jointly with Tembec Inc, a US $ 1.3 billion firm. The acquisition cost is a token one Canadian dollar, but the total initial investment in the joint venture is $ 24.3 million. The joint venture's entire output will be sold to Aditya Birla group firms at prices benchmarked to the international index, South African Pulp Index (SAPI).
The new venture will be a substitute for the Rs 650 crore greenfield rayon grade wood pulp project in India that group flagship Grasim Industries had shelved last year. As compared with the greenfield project, the acquisition works out to be almost tentimes cheaper, Kumaramangalam Birla said.
The unit will provide the Birla group's Indian flagship Grasim, Thai viscose staple fibre unit Thai Rayon Public Co and Indonesian Indo Bharat Rayon with 35,000 tonnes per annum of softwood dissolving grade pulp. This will, for the first time, provide an integrated raw material base for the largest VSF operation of the world, which will avoid unnecessary fluctuations in availability and initiated the process of integrating its global fibre operations through the acquisition of a dissolving pulp company in Canada which will provide raw material to the group's VSF units in India, Thailand and Indonesia.
The entire 110,000 tonne capacity of the venture will be available to the three AV Birla companies for captive consumption at prevailing market price. The group has a combined capacity of 410,000 tonne of VSF, for which the captive capacity of wood pulp was only around 110,000 tonne, exposing the group to fluctuations in unfavourable price and quality for the portionthat was outsourced. The new joint venture company, christened AV Cell Inc, has the $1.3 billion Tembec, one of the largest producers of dissolving grade pulp in Canada, as an equal partner.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
