NIEL to invest Rs 300 cr

Rs 275 crore earmarked for the textile sector

Nahar Industrial Enterprises Ltd (NIEL), a Ludhiana-based company with interests in textiles, sugar and steel, has planned to invest Rs 300 crore for expanding its operations.

While an investment of Rs 275 crore has been planned for the textile sector, the company also intends to set up a 8 megawatt (Mw) co-generation power plant, with an investment of Rs 25 crore.

Speaking to Business Standard, NIEL's Managing Director Dinesh Oswal said, "The need of the hour is to scale up operations to take advantage of the quota free regime. At the same time, one has to be also cost competitive to tap the opportunity."

The company has recently received court approval for merging its two listed group companies, Nahar International Ltd and Nahar Sugar and Allied Industries Ltd into NIEL. Oswal is hopeful that the amalgamation will give the company a scale and boost competitiveness.

Under its expansion plan for the textile segment, the company will add around 40,000 spindles to its present capacity of 1.2 lakh, thereby increasing the manufacturing capacity of the textiles division. The number of rotors will also be increased the present nine to 15.

With the expansion, the company plans to expand its processed fabric manufacturing facility to 1 lakh meters per day, from 60,000 meters at present.

"We will be able to exploit the huge surge in demand from the textile industry with this expansion," Oswal said. All the expansion activities were expected to be completed by the end of the current financial year, he added.

The funding would be managed through internal accruals and debt under the textile upgradation funds (TUFs) scheme, he said.

Apart from textile, NIEL which runs a steel plant with an installed capacity of 20,000 metric tonnes, intends to increase the capacity to 50,000 metric tonnes.

"We have been running it as a seasonal business. But now we want to make it operational throughout the year," Oswal said.

He added the expansion of steel plant would contribute Rs 80 crore to the company's operating income and Rs 4 crore to its profitability in a year.

NIEL, which had an operating income of Rs 405 crore in the financial year 2004, hopes to close fiscal 2005-06 with an estimated operating income of Rs 664.73 crore, which is estimated to cross Rs 1,000 crore during fiscal 2006-07.

NIEL manufacturers yarn, processed fabrics and readymade garments in its units.

It also exports to international giants like Tommy Hilfiger, GAP, Oshkosh, Timberland etc. Its domestic clients include Madura garments, raymonds, Color Plus, Allen Solly, Louis Philipes, Provogue and Pantaloons.

Expanding

• Under its expansion plan for the textile segment, the company will add around 40,000 spindles to its present capacity of 1.2 lakh, thereby increasing the manufacturing capacity of the textiles division. The number of rotors will also be increased the present nine to 15
• With the expansion, the company plans to expand its processed fabric manufacturing facility to 1 lakh meters per day, from the present 60,000 meters
• With this expansion, the company wants to exploit the huge surge in demand from the textile industry with this expansion
• The funding would be managed through internal accruals and debt under the textile upgradation funds (TUFs) scheme