Grasim invests ₹3,094 crore to expand Lyocell by 2030

What Grasim announced from New Delhi

Grasim Industries Ltd, the flagship company of the Aditya Birla Group, said its Board of Directors has approved a capital expenditure of ₹3,094 crore to expand Lyocell capacity at Harihar, Karnataka, under phase II. The decision was cleared at a board meeting held on Monday. The company positioned the investment as part of its push to participate in rising global demand for sustainable and high-performance textile materials.

Lyocell is a semi-synthetic fibre used across apparel, home textiles and technical textile applications. Grasim, which describes itself as a global leader in cellulosic fibres, is expanding capacity at a time when textile value chains are placing greater focus on traceability and lower-impact materials. The company also linked the investment to the broader manufacturing theme in India.

Phase II scope: 110K TPA in two lines

Under phase II, Grasim will set up 110K tonnes per annum (TPA) of Lyocell capacity, split into two lines of 55K TPA each. 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 said this additional capacity will complement the phase I Lyocell plant of 55K TPA that is currently under construction at Harihar. That phase I plant is expected to be commissioned by mid-2027. Taken together, the phased build-out establishes a multi-year commissioning runway, rather than a single-step addition.

Financing plan: internal accruals and borrowings

Grasim said the phase II capex will be financed through a mix of internal accrual and borrowed funds. It did not specify the split between the two sources.

For investors tracking balance sheet and funding choices, the key point is that the company is not positioning the expansion as being funded from a single source. The use of internal accruals suggests the company expects to deploy operating cash flows alongside external financing to support the build-out.

How total Lyocell capacity is expected to change

Grasim said that upon completion, its total Lyocell capacity will reach nearly 210K TPA, making it one of the largest Lyocell producers globally. The company framed the phase II build as an addition that sits on top of the phase I project currently under construction at Harihar.

In other company disclosures included in the provided material, Grasim has also described Lyocell capacity marketed under the ‘Birla Excel’ brand increasing to 153K TPA after an investment linked to the 110K TPA Harihar project executed in phases. The same set of disclosures reiterates that phase I of 55K TPA (out of 110K TPA) is progressing as per plan, with commissioning targeted by mid-2027.

The provided material contains multiple capacity references across locations and time periods, including mention of a small debottlenecking at a Lyocell plant that would take capacity from 31,000 to 44,000 tonnes per year. Grasim’s latest board-approved phase II at Harihar is specifically framed as a two-line expansion of 110K TPA.

Management commentary and policy linkage

Chairman Kumar Mangalam Birla said the Aditya Birla Group has consistently invested in emerging sectors that are critical to strengthening India’s long-term economic growth and global competitiveness. He added that the investment reflects the group’s vision, underscores confidence in the Indian market, and supports the objectives of the Make in India initiative.

Birla also said the investment is expected to enhance India’s position as a stronger and more resilient player in the global textile value chain. Grasim further said the move marks another step in its strategic expansion of advanced fibre capabilities to cater to the growing global demand for sustainable and high-performance textile materials.

What it means for Grasim’s wider cellulosic fibres business

Beyond Lyocell, Grasim said the fresh expansion will catapult its overall Cellulosic Fibres capacity beyond 1 million tonnes per annum. The company framed this as reinforcing its position as a global leader in sustainable man-made cellulosic fibres.

The provided material also states that the company has indigenously developed second and third generation fibres such as Birla Modal and Birla Excel (Lyocell). It also states Grasim has a 6% share of cellulosic fibres in the textiles fibre basket. While these points do not quantify demand, they provide context on how the company is positioning its product mix and presence.

Other growth priorities mentioned: decorative paints

Alongside fibre projects, the provided material highlights Grasim’s scale-up in decorative paints under the Birla Opus brand. It states Grasim is expanding decorative paints capacity to 1,332 million litres per annum (MLPA), with a target of becoming the second-largest player in India.

It also notes that Birla Opus emerged as India’s No. 3 decorative paints brand as on March 31, 2025. The company reported commissioning paints manufacturing capacity of 1,096 MLPA across multiple sites. This broader capex context matters because it shows Grasim is running multiple large projects in parallel.

Capex snapshots and milestones (as provided)

The provided material includes a capex tracking datapoint stating total capex spent stood at ₹9,555 crore as on June 30, 2025, out of total allocated capex (total allocation figure not provided). Separately, it states capital expenditure for 9MFY25 stood at ₹2,785 crore, of which spend for the paint business was ₹1,952 crore.

It also states the budgeted standalone capex for FY25 is ₹4,691 crore and for paints is ₹2,976 crore. These numbers offer an additional layer of context on capital intensity across the portfolio, although they are not directly tied to the newly announced ₹3,094 crore phase II Lyocell capex.

Key project details at a glance

Why the announcement matters for the textile value chain

Lyocell’s use in apparel, home textiles and technical textiles puts it at the intersection of consumer-facing brands and industrial applications. Grasim’s multi-phase commissioning timeline suggests it is planning capacity additions in line with a longer-term demand curve rather than a single near-term surge.

The company’s repeated references to “sustainable and high-performance textile materials” also show how it is framing the investment rationale. For India’s textile ecosystem, large domestic capacity additions can influence sourcing strategies for fibre and yarn makers, especially when a project is positioned around advanced fibres.

Conclusion

Grasim’s board-approved ₹3,094 crore phase II investment at Harihar adds a new leg to its Lyocell expansion plan, with commissioning milestones extending from mid-2027 (phase I) to 2028 and 2030 (phase II lines). The company has linked the project to global demand trends, Make in India objectives, and its broader scale-up in cellulosic fibres. The next hard checkpoints for markets to track are the commissioning of the phase I 55K TPA line by mid-2027, followed by the phase II line additions by 2028 and 2030.