Grasim Industries Ltd and VSF - Expanding a Commodity Market through Branding and CRM

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Case Details:

Case Code : BSTR214
Case Length : 26 Pages
Pages Period : 1999-2006
Organization : Grasim
Pub Date : 2006
Teaching Note : Available
Countries : India
Themes: Business Strategy | Product Development
Industry : Textile, Apparel, and Accessories

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

Grasim was part of the Aditya Vikram (A.V) Birla Group founded by Shiv Narayan Birla (SN) in the late 19th century. A member of the Marwari4 community in Pilani, Rajasthan, SN started trading in cotton in Bombay (Mumbai).

The cotton business expanded swiftly. In 1919, Ghanshyam Das Birla (GD), SN's grandson, went to Kolkata, to set up a jute business. GD later set up units in aluminium, cement, chemicals, textiles, and fiber industries. He was also actively involved in India's freedom struggle and was a close confidante of Mahatma Gandhi. Grasim was established on August 25, 1947 at Gwalior in Madhya Pradesh by G.D. The company was set up to manufacture fabrics. During that period, most textile mills used cotton fiber. When British India was partitioned, most of the cotton-producing areas went to Pakistan, with the result that the Indian textile industry faced a serious raw material shortage. Grasim looked for alternatives to cotton, and chose to use VSF, which was also the cheapest fiber available at the time.

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It commenced production of fabrics using VSF imported from Europe. In 1954, Grasim set up a plant to produce VSF in India for the first time at Nagda in Madhya Pradesh, thus achieving considerable backward integration.

In 1962, Grasim started a separate engineering division to manufacture plant and machinery for VSF production. In later decades, Grasim built all its plants using indigenous technology and equipment.

In 1963, Grasim set up a VSF plant at Mavoor, Kerala which became the first to use bamboo as raw material. Production at the plant commenced in 1968.

In 1972, a completely indigenous plant was built at Harihar, Karnataka that made use of pulp from eucalyptus trees. The plant employed in-house technology for producing wood pulp through an innovative oxygen bleaching process which reduced the use of chlorine...

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4] A community originally from the Marwar region of Rajasthan who lent money against pawned items.


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