Jagjanani Textiles' IPO to part-finance capex

207 Investors following Jagjanani Text. Share this News with them.

0

Like this story, share it with millions of investors on M3

Jagjanani Textiles' IPO to part-finance capex

Jagjanani Textiles is coming out with an issue of 81 lakh shares to raise Rs 21 crore. SG Vyas, Managing Director of Jagjanani Textiles says the money raised through the IPO will be used for expansion of capacity and the new spinning unit.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Redington debuts with 24% premium IDEA Cellular IPO oversubscribed 27 times BSE | NSE 01/01/70 Are Mutual Funds betting on ?

Jagjanani Textiles is coming out with an issue of 81 lakh shares to raise Rs 20 crore.

SG Vyas, Managing Director of Jagjanani Textiles says the money raised through the IPO will be used for expansion of capacity and the new spinning unit.

Vyas said that the total project cost is about Rs 54 crore of which, Rs 20 crore will be funded via equity, while the remaining will come from promoters and term loans.

Excerpts from CNBC-TV18's exclusive interview with SG Vyas:

Q: It is Rs 20 crore issue, could you tell us how much is essentially going to be for the new spinning unit you are setting up and how much will it expand your capacity?

A: The total project cost is about Rs 54 crore of which, Rs 20 crore will be funded via equity, while the remaining will come from promoters and term loans.

In terms of spinning, there are two aspects; one is adding value to the existing products and second is adding additional spinning capacity and then vertical integration for going to fabric, it is basically a project from spinning to weaving. We will be spending close to about Rs 10 crore in spinning and the rest of the amount goes to weaving.

Q: When will it be completed and what additional revenues will you derive out of this expansion and this new unit?

A: We intend to complete the project by June 30, because we have already been working on it and some of the equipments have already been installed. Presently our turnover is Rs 30 crore and after the implementation of the project the turnover should rise to Rs 60 crore. By '07-08 we should be touching about Rs 50 crore and then next year onwards it should be Rs 60 plus.

Q: What will you do in terms of margins?

A: This is a vertical integration process where the margins are definitely going to be better as will savings on the cost of marketing yarn, it will be an inhouse consumption of yarn and therefore you save on sales tax, on freight, save on packing cost and then in any case you also save on convergence cost from yarn to fabric.

Q: How much would be the savings on account of all these?

A: It works out to about 35% of the convergent cost from yarn to fabric would be subsidized by our saving on sales tax, packing, transport and other use of common facilities.

Q: How sensitive are you to the movement in terms cotton prices and what is the outlook on that front?

A: As a spinner we are affected by the fluctuations in the cotton rates but once you get on to the weaving stage the contribution of raw material cost gets substantially reduced. In spinning the raw material costs contributes to about 65-70% of your revenue whereas in weaving it comes down to about 45%.