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The Aditya Birla group will invest $250 million (Rs 1,375 crore) on expanding the capacities of Terrace Bay Pulp Inc, a Canadian company that it acquired in July.
Business Line has learnt that the equity portion of the investments will be $110 million over the next three years. Grasim Industries, the group company that acquired Terrace Bay, will be contributing $44 million.
The acquisition of the Canadian pulp maker was routed through an SPV, AV Terrace Bay Inc, in which Grasim holds 40 per cent equity stake while the balance 60 per cent is held by Thai Rayon Public Co Ltd, Thailand (a group company).
“Over the next three years, the Aditya Birla group plans to invest $250 million (about Rs 1,375 crore) in Terrace Bay Pulp Inc in a phased manner to enable the mill to produce dissolving grade pulp with a capacity of 280,000 tonnes,” says ratings agency, CARE, which has given a Triple A rating to the Grasim’s long-term debt instruments. Grasim today has a capacity of 333,975 tonnes a year.
This acquisition is expected to help Grasim strengthen its raw materials base and protect itself from the volatility of raw material prices.
“Considering the small quantum of cash outflow for the acquisition compared to Grasim’s net cash accruals, the financial profile and liquidity position of Grasim continues to remain healthy subsequent to the acquisition,” says CARE.
Last year, the Aditya Birla Group acquired Swedish speciality pulp and bio-refinery company Domsjo Fabriker for $340 million.
On a consolidated basis, Grasim registered a net profit of Rs 3,531 crore on total operating income of Rs 25,612 crore in 2011-12.
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