Grasim approves ₹3,094 crore Lyocell expansion by 2030

Shares in focus after board clears fresh capex

Shares of Grasim Industries Ltd were in focus after the Aditya Birla Group company’s board approved a fresh capital expenditure plan for Lyocell at Harihar, Karnataka. In the previous session, Grasim Industries shares fell 1.06% to ₹3,050. The company said the board cleared ₹3,094 crore for Phase II capacity expansion of Lyocell, which it positions as a response to rising global demand for sustainable and high-performance textile materials. The investment adds to an existing Phase I project already under construction at the same site. The expansion is aimed at increasing third-generation Cellulosic Staple Fibre (CSF) capacity through Lyocell.

What the board approved on June 8, 2026

Grasim said on June 8, 2026 that its Board of Directors approved capex for Phase II Lyocell capacity expansion at Harihar. The company pegged Phase II capacity addition at 110,000 tonnes per annum (TPA). This Phase II capacity is planned as two lines of 55,000 TPA each. The company did not disclose any allocation split by line in the capex number, but it did provide a commissioning sequence. Grasim also reiterated that it is a global leader in cellulosic fibres.

Phase II project details: 110K TPA in two lines

Under Phase II, Grasim plans to set up 110K TPA of additional Lyocell capacity at Harihar. The 110K TPA will be split into two separate lines of 55K TPA each. Grasim said the first 55K TPA line is expected to be commissioned by 2028. The second 55K TPA line is expected to be commissioned by 2030. The company also described each 55K TPA line as 150 tons per day in the material provided.

Phase I status: 55K TPA plant under construction

The Phase II expansion is meant to complement Phase I, which is already being built at Harihar. Grasim’s board had earlier cleared the Phase I Lyocell capacity expansion of 55K TPA at Harihar in February 2025. The company said the Phase I capacity is under construction. It expects the Phase I plant to be commissioned by mid-2027. With Phase I and Phase II combined at Harihar, Grasim indicated Lyocell capacity addition of 165K TPA at the site.

Funding plan: internal accruals plus borrowed funds

Grasim said the Phase II capex of ₹3,094 crore will be financed through a mix of internal accrual and borrowed funds. The company did not specify the split between the two sources. The disclosure places the financing plan alongside a multi-year commissioning schedule that runs from mid-2027 to 2030 across Phase I and Phase II. For investors, this indicates that part of the cash requirement will be met through the balance sheet rather than only through operating cash flows.

What it means for Grasim’s overall Lyocell scale

Beyond Harihar, the company linked the Phase II project to a much larger stated end-state for Lyocell. Grasim said that upon completion, its total Lyocell capacity will reach nearly 210K TPA. It also said this would make it one of the largest Lyocell producers globally. The material provided does not break down the current base Lyocell capacity that sits outside the Harihar additions, but it does state the end capacity number.

Strategic context: specialty products and CSF capacity goals

The expansion was also framed as part of a broader portfolio shift within cellulosic fibres. The provided text notes that Grasim’s specialty products segment includes Lyocell, Modal, Dope-dyed, and Recycled fibres. The company aims for specialty products to constitute 35% of its portfolio by 2030, as per the material shared. Separately, Grasim has articulated a broader target to exceed 1 million tonnes of annual CSF capacity by 2030. These targets provide context for why Lyocell additions are being planned on a phased basis.

Capex tracking datapoint disclosed in the material

Alongside the Lyocell approval, the provided material includes a capex tracking datapoint. It states that total capex spent stood at ₹9,555 crore as on June 30, 2025. The same datapoint notes that this was out of total allocated capex, but the total allocation figure was not provided. While this number is not explicitly tied only to Lyocell, it provides a reference for the company’s broader investment cycle.

Market impact: what is known from the session data

The immediate market datapoint available from the provided text is the prior session move. Grasim Industries shares fell 1.06% to ₹3,050 in the previous session. No intraday reaction figure for the day of the announcement was provided in the material. The board-approved capex and the long commissioning timeline are likely to keep execution milestones in focus, especially the mid-2027 commissioning target for Phase I and the 2028 and 2030 targets for Phase II lines.

Key facts table

Timeline of commissioning milestones

Why the announcement matters

The announcement extends Grasim’s Lyocell build-out into a clearly sequenced, multi-year programme anchored at Harihar. The company has now disclosed a full set of commissioning milestones from mid-2027 through 2030 across Phase I and Phase II. It has also tied the investment to a stated end scale of nearly 210K TPA of Lyocell capacity and to longer-term portfolio targets such as specialty products reaching 35% by 2030. The key variables to track, based on the disclosures provided, are the construction progress of Phase I, the start and execution of Phase II, and how the funding mix between internal accruals and borrowings evolves as project spending ramps up.