To use GDR proceeds for widening products range: Texmo

In an interview with CNBC-TV18, Sanjay Agarwal, CMD of Texmo Pipes and Products spoke about the company's GDR issue from which it is looking to raise USD 10 million. He said the proceeds of the issue would be used for the expansion of the existing products range and to get into new products.

The company is also planning to set up a 3 megawatt capacity power project using biogas. Below is the verbatim transcript of Agarwal's interview with Ekta Batra and Reema Tendulkar of CNBC-TV18. Also watch the accompanying video. Q: Can you take us through this GDR issue where you all are raising around USD 10 million? How exactly is the fund going to be used? A: The fund will be used for the function of the company. The company is also planning to set up a power project using the biogas for up to 3 megawatt capacity. This will be used in the preliminary basis only for the internal consumption and later on will be used for the commercial purpose. Apart from this, we are also looking for long term working capital requirement of the company as well as to repay some of the long term debts of the company. Q: How much will you all be looking to raise? Does it still stay at USD 10 million and what's the current debt of the company and how much of these funds will be used to reduce your debt? A: The debt is only of the long term debt which stands close to Rs 5 crore and only that will be repaid. The company does not have any other debt apart from the working capital for which company has got the CC limit from the bank which is used in the normal day to day course of the business. Q: USD 10 million is what you are looking to raise? A: We will be using USD 10 million for the expansion of the existing products range as well as to get into the new product. As mentioned earlier, to set up a power project and also to set up a office overseas to cater to the export market. Q: Any green shoe option for this USD 10 million? A: Not as of now. We expect to get close on the 8th of this month as the GDR will be closing. We expect to get it subscribed so there is no green shoe option. Q: Would this complete your entire fund requirements or is this a part of a larger exercise? A: This fund requirement will meet the requirement for the coming financial year. We expect that with the help of this fund the company will scale to the new sales turnover highs. This will be quite enough for the coming financial year. Q: Picking up what you said, you said that it will scale up your revenues in FY11 what will your revenues look like and thereafter in FY12 and on account of this power plant how will your margins improve? A: The company has closed the last financial year on a very good note. We had closed sales close to Rs 140 crore which is a good jump of close to 65%. For the next financial year we have set a higher target. As the power project will come into affect we will be saving in what we are paying for the electricity charges to a certain extent, so that will help us improving the margins as well. Q: How much will it improve by? A: If you go by per unit cost, we will be saving around close to Rs 2 per unit consumption. Q: In March there was some fire which occurred in of your factory premises. Any sort of a financial impact, any inventory write down we are dealing with? A: There was a fire in the month of March but the survey team has completed the work and they are quite satisfied with that. We expect to receive the claim. The material was 100% insured so there is no problem as such. Only for the short term there is a bit liquidity problem but that won