Birla Agro plans IPO by May

Yash Birla group company Birla Agro Pvt Ltd is planning to hit the capital market with Rs 25 crore initial public offering by May 2006. The company has drawn up Rs 130 crore expansion plan for upgradation and modernisation of its cotton and synthetic plants.

"Cost of the new expansion project will be raised through IPO and term loans under the Technology Mission on Cotton (TMC) of the Union government," K K Baheti, joint president, Yash Birla group, said.

The company has three plants in Khamgaon, Ghatanji and Dhule. Post the expansion, the capacity would increase to 55,000 spindles as against the current 18,000. The turnover of the company is expected to rise to Rs 126 crore by 2008-09 from the current Rs 40 crore.

Baheti said the new project is expected to start operations by 2007-08 at Khamgoan and the cost of the new project would be Rs 130 crore of which Rs 85 crore would be raised from term loans and remaining through internal accruals and IPO."We will hit the capital market by April or May and the size of IPO will be over Rs 25 crore," he added.

As part of the expansion, Vardhan Syntex, which was initially a part of Zenith Ltd would be hived off and would be merged with Birla Agro as a subsidiary.

"With this, the company will make a foray into synthetic yarn. We are contemplating a change in the name of the company after the merger. The new name will reflect the company's strength in ginnin and cotton pressing as well as synthetic yarn," Baheti said.

Birla Agro is planning to change their name into Birla Cotsyn (I) Ltd after the consolidation and IPO.

The modernisation would enable the company to entering into weaving and process. At present, it only undertakes ginning and cotton pressing for its clients, he said.

"As part of the forward integration, the company is looking at exploring possibilties to enter into home furnishing fabrics, including terry towels and made-ups. However, the idea is at nascent stage. We are yet to finalise the details," Baheti said.

According to sources, the home textile market in the country is largely unexplored as textile majors eye only international market. "There are very few players in this segment," a source said.

Baheti said the company would be developing an in-house brand and is not looking at acquiring brand.