Thursday, January 18, 2007

Textile companies to raise about Rs. 1000 crores through IPO

Booming capital markets are encouraging companies in making the most of the situation. Five leading textile companies are set to raise about Rs. 1000 crores through IPOs in the near future to meet expansion plans, that include opening up retail stores and adding to manufacturing capacities.

The textile firms, which have filed their Draft Red Herring Prospectus (DRHP) with market regulator SEBI, include Oswal Woolen Mills Limited (OWM), House of Pearl Fashions Limited, Yogindera Worsted Limited and Asahi Songwon Colors Limited. The public offers of Pearl Fashions and Yogindera would open on January 16, while Oswal and Asahi have filed their documentation with the market regulator and are in the process of scheduling their IPOs. Total capital expenditure, which these five companies have finalized add up to Rs. 1217 crores, of which the major portion would come from the market.

Oswal Woolen, a flagship company of Nahar Group of Companies, is looking to raise about Rs. 179 crores with a public issue of 8.32 mn equity shares to fund growth plans, which include expanding retail presence through its 'Monte Carlo' brand outlets for woolen hosiery and cotton garments. OWM would spend Rs 40 crore on expansion of Monte Carlo brand outlets, taking the number of franchisee-run stores from 21 to 144 by 2009 and company owned stores to six. House of Pearls will tap the market with a total issue of 5.98 mn equity shares, through which it aims to raise up to Rs. 396 crores. It also aims to increase production capacity of the group from 20 mn pieces per annum to 40 mn pieces per annum. The company has earmarked an investment of about Rs. 360 crores for its expansion plans over the next three years, which would see it opening 10 pilot stores for its brand in the country by end of 2007. Asahi Songwon has lined up an expansion plan of Rs. 52 crores, of which it plans to raise Rs. 44 crores through the IPO. It intends to expand manufacturing facilities of CPC Blue Crude from present level of 3600 TPA to 10,800 TPA, set up a plant for manufacturing pigment beta blue and a new captive power plant at Padra, Vadodara. Yarn manufacturer Yogindera Worsted would raise Rs 14.4 crore through its IPO which would comprise an issue of 60 lakh fresh equity shares. The company is planning to utilize the funds to add 3,200 spindles to its current 6,040. The total expansion would need an investment of about Rs. 16 crores. The acrylic and blended company is also planning to diversify into ready to wear garments and would utilize part of the funds to set up a garment manufacturing unit in their Ludhiana facility.

Besides these four, Orient Craft has announced its plans of hitting the capital market soon to raise between Rs. 300-350 crores. In all, the textile public offers are likely to gross in over Rs. 1000 crores from the market.

Read the article in The Economic Times.

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