Aarvee Denims and Exports Limited is raising US$ 20 million through foreign currency convertible bonds.

The fund would be utilized to finance its wind energy project envisaging a capital expenditure of Rs 125 crore. The company plans to commission 14 wind mills each of 1.5 MW in Kutch, Gujarat by June 19 this year.

The project is part of the company’s strategy to bring its energy cost to 6.5% of sales. Energy is the second largest cost component and currently the same approximate 11% of sales.

The entire project is proposed to be implemented before June 19 as under the state’s wind power generation policy of 2002 the banking of surplus energy generated for six months against captive consumption is available for those wind mills commissioned and operational by that date.

The project apart from enhancing cost competitiveness and thereby profitability would also reduce the tax incidence due to higher rate of depreciation on wind mills. Further, the income of wind energy could be claimed as 100% tax free income under section 80 (IA) of Income Tax Act.

Meanwhile, the company’s Q3 results show sales revenue of Rs 53.75 crore. The Company’s sales income during the same quarter in previous year had totaled Rs 72.63 crore.

According to un-audited financial results its net profit for the third quarter is Rs.11.10 crore compared to Rs. 9.77 crore in the corresponding quarter of the previous year.

For the nine-months of the current financial year ended on December 31, 2006, the company’s sales income has totaled Rs 176.94 crore as against Rs 215.79 crore during April-December 2005. The net profit for the period under review was Rs 22.03 crore as compared to Rs 27.35 crore during April-December 2005.

The company also announced that the integrated denim manufacturing facilities with latest equipments has become operational at Unit III, Narol, Ahmedabad during the quarter under review.

Sourced From: Sobhagya Advertising Service