Textile majors to raise about Rs 1000cr through IPO

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Making the best of the boom in the stock market, five leading textile companies are set to raise about Rs 1000 crore through IPOs in the near future to meet expansion plans, that include opening up retail stores and adding to manufacturing capacities, reports The Economic Times.

The textile firms, which have filed their draft red herring prospectus, DRHP with market regulator Sebi, include Oswal Woollen Mills, OWM, House of Pearl Fashions, Yogindera Worsted and Asahi Songwon Colors.

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

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 finalised add up to Rs 1217 crore, of which the major portion would come from the market.

Oswal Woollen, a flagship company of Nahar Group of Companies, is looking to raise about Rs 179 crore with a public issue of 83.2 lakh equity shares to fund growth plans, which include expanding retail presence through its 'Monte Carlo' brand outlets for woollen hosiery and cotton garments.

"The proceeds of the IPO would be used to part-finance our expansion programme involving a total outlay of Rs 253 crore," OWM executive director (Corporate Finance and Tax) Dinesh Gogna told media.

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 59.8 lakh equity shares, through which it aims to raise up to Rs 396 crore. It also aims to increase production capacity of the group from 20 million pieces per annum to 40 million pieces per annum.

The company has earmarked an investment of about Rs 360 crore 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.

"We would be foraying in the country's retail segment with our own brand, which would comprise both apparel and accessories," House of Pearl Vice Chairman Pallak Seth said. Asahi Songwon has lined up an expansion plan of Rs 52 crore, of which it plans to raise Rs 44 crore through the IPO.