Morarjee Textiles to invest Rs 170 cr

The Ashok Piramal group-owned Morarjee Textiles will invest Rs 170 crore over the next two years. The vertically integrated company which is in its expansion phase, will primarily invest the sum in setting up new garment plants, enhancing spinning capacities and a captive power plant.

The company will pump Rs 50 crore in adding fresh 25,000 spindles taking it to 55,000 at its Nagpur plant. On the garment front, the company plans to increase its capacity four-times from the current level.

At present, the garment producing capacity of its Bangalore units is 1.2 million pieces per annum.

"We are expanding our current garment capacity to 2.4 million pieces at our existing units in Bangalore, which will be completed within six-months from now. In addition to it, capacities for producing another 2.4 million pieces will come up by March 2008," said Harsh A Piramal, executive vice- chairman, Morarjee Textiles. There will be two new garment units which will attract around Rs 50 crore, he added.

The company is exploring locations for setting up these greenfield units.Vizag and Chennai are most likely to be selected as new destinations.

The Nagpur facility at Bultlibori will almost be doubling its spindles capacity, the company's 10 mw coal-based captive power plant near this facility will fulfill the power requirement and in turn the company expects to make some savings. Power plant will take a chunk of Rs 40 crore.

"The power utility will be ready by December, 2008. Once it becomes operational, the company will save up to Rs 5 crore per annum on power costs front. Power generation will be sufficient to meet the total demand of the Nagpur plant," said Piramal.

The textile firm is looking after acquisitions, the management said the expansion will help the company in meeting its increasing requirement.

Apart from this, the company will spend around Rs 20-30 crore in upgrading machinery at its existing units. The project costs will be partly met by raising money from the market (Rs 43 crore), around 50-55 crore from warrants attached to the rights issue and the rest under Technology Upgradation Fund Scheme (TUFS) and internal accruals.