Grasim Industries Ltd., Staple Fibre Division, Nagda (M.P.

) Unit Profile Grasim is a flagship company of the Aditya Birla Group and is today a dominant player in the manufacturing of Viscose Staple Fibre (VSF), an extremely versatile textile fibre that has characteristics similar to cotton. Our unit was established in 1954 with production capacity of 15 TPD. The plant has grown organically with current installed capacity of 415 TPD. With use of entirely indigenous resources including raw materials, know-how and equipment Grasim has emerged as one of the worlds most cost-efficient VSF producers. The Company is committed to innovation and creativity and has significant strengths in Research & Development. In collaboration with the Birla Research Institute for Applied Sciences at Nagda, the Companys R&D teams endeavour to make technology work. This is very important since VSF manufacturing process is highly energy intensive and its contribution to total cost of production is approx. 12.5%. Energy Consumption The unit is periodically carrying out internal as well as external Energy Audits to plug losses and to adopt best available technology through its on going modernization programme. Aditya Birla group has aggressively adopted WCM concepts in the year 1997 across all the plants in different businesses. All modern management tools were incorporated for bringing in Cultural and attitude change under this unique model of achieving excellence in all activities related to manufacturing. Employee involvement with training and motivation are the prime objectives. A brief outline of WCM model along with mission is given below:
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WCM Mission Zero Accident Zero Pollution Zero Losses Zero Breakdown Zero Defect Zero Customer Complaints

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Market & Customer Orientation

The Cross functional teams are identifying and eliminating non-value adding process/equipment. This is apart from regular audit for identifying energy conservation opportunities. The energy consumption pattern since the last three years has been on a declining trend. The results does not reflect the energy conservation measures exactly as several measures have been taken to enhance quality of product which requires higher energy consuming equipments/process. Year 2003-04 2004-05 2004-06 Production 126070 150494 131111 kWh/ tonne VSF 1174 1167 1102 Million Kcal/ tonne VSF 5.60 5.46 5.37

Energy Conservation Commitment, Policy and Organization Setup Our unit is committed to energy conservation in the organizational as well as ecological interest. Other than economic gains the environmental impact is given adequate importance. This is reflected in our common Management Policy which has elements of Quality, Environment and Resource

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management. Resource conservation has been taken up in broader aspect and Energy conservation is a part of it. The relevant portion of the policy is reproduced for reference : We are committed to achieve resource conservation in the national interest by continually improving the efficiency of manufacturing process and adopting innovative technology, to maximise the utilisation of resources. We are committed to achieve protection of environment by preventing pollution at the source itself and effectively treating the inevitable discharges to applicable legislative requirements. Energy consumption is being monitored daily by Technical Cell (Energy) at micro level and each department head is made responsible for specific consumption in his department. Further, the daily, weekly and monthly report is send to all concerned including Technical heads and Unit head for appropriate action. The issues are discussed in detail during the Monthly Progress Review (MPR) meeting. Review of Saving Projects is also done in this meeting so as to facilitate faster implementation and resolving issues, if any. Technical Cell (Energy) monitors the energy consumption pattern and also initiates all activities related to Saving Projects. A cross functional team works on different identified projects in coordination with department heads and help from external sources and vendors is taken, if required. This Cell is headed by Vice President (Energy Centre) who reports directly to the Unit Head. Energy Conservation Achievements Short description of major energy conservation projects implemented during the year 2005-2006 are given below : 1. Adoption of Variable Frequency Drives : Variable frequency drives have been extensively used to save energy in Pumps, Cooling Tower Fans and Boiler FD fans where load variations were quite frequent, or where the pumps/blowers were running at under-rated capacity. The pump/blower/fan RPM are now auto-controlled based on process input resulting in saving of energy as well as better control over process conditions. The savings are 7120 kwh/day ~ Rs 45.37 lacs p.a. with an investment of Rs. 163.45 lacs. 2. Anti Friction Coating on High Capacity Pumps Pump internals (body) gets eroded /corroded and weared out with increase in its life resulting in higher friction and increase in internal clearances. Due to this problem specific power consumption increases. Anti Friction Corro-Coating on High Capacity Cooling Tower pumps was done to reduce this effect The savings are 144 kwh/day ~ Rs 1.06 lacs p.a. with an investment of Rs. 3.68 lacs. 3. Plant Lighting through Low Voltage Transformer Lightning voltage in a section of the plant was found to be on slightly higher side. It was decided to install a separate transformer for this purpose and lightening voltage was brought down in the range of 210-215 Volts. The savings are 66 kwh/day ~ Rs 0.54 lacs p.a. with an investment of Rs. 3.00 lacs. 4. Energy Efficient Boiler Feed Pumps for Acid Plants Conventional horizontal multistage pumps were used for feeding water to Boilers. They were replaced by vertical multistage Energy Efficient pumps & EE motors. The savings are 120 kwh/day ~ Rs 0.81 lacs p.a. with an investment of Rs. 2.00 lacs. The mechanical seals have eliminated the frequent gland leakage and its maintenance problem. 5. Reduction in Heat Loss and Air Leakage from Fibre Dryers Conventional dryer windows and panels which are age old have resulted in damaged insulation and pockets for air leakage. These were replaced with SS windows having better insulation (Perlite ipo Glass wool) The savings are 4.11 TPD steam ~ Rs 8.11 lacs p.a. and Insulation replacement cost of Rs. 1.32 lacs p.a. with an investment of Rs. 53.87 lacs. Reduction in heat loss has made the workroom environment better. 6. Gravity feeding in place of pumping of Pulp Slurry Pulp slurry was transferred from Mixer to Homoginiser, which were on the same elevation, using pumps. The mixers were lifted while homogenisers were brought down to enable gravity transfer. Further the diameter of transfer line was also increased as slurry consistency is high which prevented free flow.

The savings are 180 kwh/day ~ Rs 1.47 lacs p.a. and with an investment of Rs. 4.22 lacs. Also pump maintenance work has been eliminated. 7. Reduction in Refrigeration load by shifting Condensation load on Cooling Towers using high Heat Transfer Spiral Condensers For CS2 refining process the CS2 condensation was done in Shell & Tube Condensers using chilled water. It was planned to use a lesser energy intensive medium such as cooling tower water for this purpose, but condensation efficiency and Refining losses were the main issues. Specifically designed Spiral condensers with higher HT coefficient were used for this purpose for the first time. Trial was taken with one condenser initially as no reference for this type of application was available. After successful trial, the total scheme was implemented with a combination of Spiral as well as She ll & Tube Condensers. RCC Counter Flow Cooling tower with PVC fills and direct coupled fan motor was erected to cool water, as the same is very compact, will almost eliminate maintenance and have lower power consumption as compared to cross flow cooling towers. The savings are 2230 kwh/day due to stoppage of 150 TR Reciprocating Chiller ~ Rs 17.30 lacs p.a. with an investment of Rs. 62.87 lacs. 8. Recovery of Flash Steam Flash steam from hot steam condensate was being vented. This was recovered at two locations. In CS2 plant, a simple low temperature water scrubbing system is now being used to preheat the input water for Acid plant boilers. Similarly, the condensate from fibre dryers is now being flashed at low pressure and the steam vapours are used in Anhydrous Evaporator Heater operating in vacuum. The combined savings are 6.72 TPD steam ~ Rs 11.30 lacs p.a. with an investment of Rs. 12.25 lacs. 9. Energy Efficient Screw Compressors in place of Reciprocating Compressors Smaller capacity individual Reciprocating compressors for Bailing Press were replaced with a single higher capacity Screw Compressor based on the fact that they are energy efficiency and can reduce power consumption by approx. 20-25%. The savings are 576 kwh/day ~ Rs 4.26 lacs p.a. and with an investment of Rs. 20.02 lacs. Also regular maintenance work of reciprocating compressors has been eliminated. Energy Conservation Plans and Targets The plan and Targets for the next two years are : Year Electrical* Thermal* kwh/T VSF 2005-06 (Base year) 2006 - 07 2007 - 08 1070 1050 1038 Millin Kcal/T VSF 5.59 5.59 5.47

Reduction over year 2005-06 Electrical% 1.9% 3.0% Thermal% 0.0% 2.1%

The major initiatives planned or under implementation are : Projects planned or under implementation Triple Effect Anhydrous Evaporator ipo 2 Double Effect Evaporators Installation of ETP sludge briquette plant eliminating Sludge Dryer Acid Absorption Crystalliser in place of steam based crystalliser Installation of Multi Stage Flash Evaporator ipo Triple Effect Evaporator Installation of PHE for pre-cooling of Spin bath feed to Crystallizer Higher efficiency pumps ipo low efficiency pumps in Spinbath section Energy Unit MKcals/year Lacs kWh/Year MKcals/year MKcals/year Lacs kWh/Year MKcals/year MKcals/year Lacs kWh/Year

Saving Value 2084.9 2.60 5629.2 23454.9 5.34 21066.0 7297.1 7.88

Rs. Lakhs 17.82 36.84

Investment Rs. Lakhs 50.72 67.84

176.6 160.19

1016.32 424.03

50.85 18.13

27.09 57.79

Safety & Environment Grasims prime concern has been to integrate Safety, Health and Environment in all its industrial activities through Motivation and Promotion; Training, Education & Awareness; Inspection, Audit and Testing; Investigation & Analysis and System Perfection. These activities form strong pillars of SHE management across all levels in the organization. In the context of industrial activity, the Unit strategy is to maintain Economic Progress with Sustainable Development through Resource saving in production process and adequate treatment of inevitable discharge/ emissions to render them harmless. However, the thrust is on arresting / eliminating losses at the source itself. The compliance and continual improvement in these areas is being ensured through implementation of ISO-14001, OHSAS-18001 and SA-8000. In addition to this the company is actively practicing Rural & Community Services under CSR activities.

BUSINESS OVERVIEW

Positioning The business was established in 1954 with Plant & Equipment imported from Dobson & Barlow of U.K. and having a production capacity of 15 TPD. Grasim today is a dominant player in the Viscose Staple Fibre (VSF) segment and this is particularly commendable because of its use of entirely indigenous resources including raw materials, know-how and equipment. An innovative and research-oriented organisation, Grasim has emerged as one of the worlds most cost-efficient VSF producers due to its integrated operations. Grasim is also Indias largest producer of Sodium Sulphate a bye-product of VSF manufacture. This chemical is used widely in paper & pulp, detergent, glass and textiles industries. Pulp & Fibre Business contributes significantly to the National Exchequer by way of Excise duty and also to Indias foreign exchange reserves through export of Pure and Blended Yarn as well as fabrics and Made-ups based on VSF.

Product VSF is an extremely versatile textile fibre that has characteristics similar to cotton. Next to cotton, VSF is the best man-made fibre with durability and lustre. It can be used in blends with polyester and other synthetic fibres. Its moisture absorption property renders it ideal for tropical countries like India.

Process Description Rayon grade pulp is steeped in Caustic Soda solution and excess lye is drained in slurry presses to obtain a mat of Akali Cellulose. After shredding, Alkali Cellulose is reacted with Carbon-disulphide and then dissolved immediately in dilute Caustic Soda solution to give Viscose which is deaerated filtered and ripened before extrusion through spinnerettes into a spinning bath containing Sulphuric Acid, Sodium Suphate and special additives. Cellulose is regenrated in the form of fine filaments and Sodium Sulphate is produced with the liberation of Carbon-disulphide, part of which is recovered for reuse. The filaments are cut into the required staple length, washed, desulphurised, bleached, soft finished and dried to obtain Viscose Staple Fibre.

Manufacturing VSF production by the Business has recorded a production/sales growth of 7.5% CAGR over last 46 years. The Company is committed to innovation and creative solutions and has significant strengths in Research & Development. In collaboration with the Birla Research Institute for Applied Sciences at Nagda, the Companys R&D teams endeavour to make technology work. Fruits of these efforts are manifested in development of speciality fibres, quality improvement, lower costs, optimal use of energy and other scarce inputs, minimal wastage and environmental conservation.

Marketing The markets for regular and various speciality fibres were concurrently developed through a variety of promotional steps and technical services to the value chain. Yet selling of VSF was not a problem, since VSF was in the growth phase of its product life cycle and the cheapest amongst all textile fibres. However, the situation changed totally after 1995 with two structural changes taking place in the Textile Industry. The first structural change resulted in easy and cheap availability of competing textile fibres i.e. cotton and polyester, as a result of which VSF, which used to be the cheapest of all textile fibres became the costliest. The second structural change took place in 1997 when polyester texturised yarn became cheaper than polyester-viscose blended yarn. On account of these structural changes, VSF sales, which had been growing continuously until 1997 started getting affected and now pose a major challenge for growth.

Business Dimensions The business comprises of: a) Manufacturing activities at Staple Fibre Division, Nagda, M.P. Engineering & Development Division, Nagda, M.P. Harihar Polyfibres Pulp Unit at Harihar, Karnataka Grasilene Division VSF Unit at Harihar, Karnataka Birla Cellulosic VSF Unit at Kharach, Gujrat b) Research & Development activities at Birla Research Institute for Applied Sciences, Nagda, M.P. Grasim Forest Research Institute at Harihar, Karnataka Technical Reasearch & Application Development Centre at Kharach, Gujarat

c) Centralised Marketing activities at Marketing Head Office, Mumbai, for VSF. Staple Fibre Division, Nagda for Sodium Sulphate d) Business Cell at Nagda for consolidation of all business activities.

Key Statistics for Grasim Staple Fibre Division, Nagda FY 2005-06 1 2 Installed Capacity Production Volume Grey Dyed Turnover Volume Grey Dyed No. of M/c (Mfg. Lines) Power Plant Capacity No. of Employees Turnover Value Gross PBDIT Tonne Tonne 151,475 77,547 53,564 Tonne 83,907 55,158 11 103 3003 1253 294

4 5 6 7 8

No. MW No. Rs. Crores Rs. Crores

Key Challenges i) Manufacturing How to produce international quality VSF from indigenous Pulp and old manufacturing plants. How to cater to changing customer requirements for a multitude of product specifications Environmental issues Detailed Study and Specific Action Plan, if any, arising out of latest Gazette Notifications

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iii) Marketing Volume : How to enlarge existing markets, which are stagnant and develop new usage/applications. Pricing realisation: How to take care of substitution dynamics on account of competing fibres having become substantially cheaper. iv) Global positioning How to penetrate the stagnant global markets and take advantage of the restructuring taking place in the Industry to grow the business. How to develop Lyocell Technology for commercial adoption.

Profile of Employees S.No. 1 2 3 Particulars No. of Employees Regular Contractors 2004 3622 1802 2005 3301 1987

Man-hours worked (including Overtime) S.No. 1 2 3 Particulars Man-hours worked Regular Contractors 2004 7164409 3991800 2005 6563304 4252640