Don't need funds for SEZ development now: Pradip Overseas

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Q: We are given to understand in your risk factors that the funds for implementing the textile SEZ has not yet been tied up?

A: The SEZ is an upcoming project and in that we need about Rs 100-125 crore. For that, as and when participation comes we will go further in through debt by about Rs 80 crore and the balance available through whatever participation happens there with their margins.

Q: I have some confusion, will the textile SEZ be owned by Pradeep Overseas?

A: Yes.

Q: You are planning to set up your expanded textile capacity within this SEZ?

A: Yes.

Q: But you have raised money for expansion but not for your SEZ?

A: We raised money for expansion because for SEZ it is needed as and when it is going for the common infrastructure. So a huge amount is not required for that but it is required for this at about Rs 125-150 crore and at that time we would definitely go for a small amount of loan from financial institutions and the balance from whatever revenue comes from the participations over there. So for the SEZ development we don't need funding as of now.

Q: Your Red Herring Prospectus filed with SEBI also indicates that a large percentage of your exports are Greys. Now obviously grey cloth doesn't have that much of a margin. Do you see your ability of your company to go beyond these 10% margins that you are operating at over the past 3-4 years?

A: We have a very good backup of grey suppliers since the last 20 years plus. We are coming off either textiles on SEZ and our concept of SEZ is like inviting those people who are right now supplying us the grey fabrics and who are putting a unit over there.

We will give them a buyback guarantee and we will get very good grey fabrics with consistent quality with zero logistic cost and a consistent supply as and when we require the quality aspects. So we think that as and when we move to the SEZ we would defiantely get good margins.