Pradip Overseas to form JV with US textile firm

Pradip Overseas Limited, the Ahmedabad-based manufacturer of household linens, is entering into a joint venture with a US-based textile company for branding and marketing its home linen in the overseas market.

The JV, worth Rs 200 crore, will be finalised within the next three months when Pradip Overseas will sign a memorandum of understanding with the US company.

Refusing to divulge the name of the company, director, J S Negi, said, "We are in the process of finalising talks with the company and are yet to sign an MoU with it. The company is worth $200 million and the total investment will be around Rs 200 crore. The deal is likely to be struck within the next three months."

Besides, the company is planning a domestic JV with at least two companies. According to Negi, the companies would look after its branding and marketing activities in the domestic market.

"The domestic joint ventures will also be worth Rs 200 crore," said Negi, adding that both of them would be Mumbai-based companies without giving further details.

Meanwhile, its proposed textile park - Green Field Textile Park - with a capacity of 5 lakh metres per day on the outskirts of Ahmedabad is taking shape. Currently, the company owns a single processing plant with a capacity of 2 lakh metres per day and plans to set up its own spinning, weaving and processing units at the park.

Of the total linen produced from the park, 80 per cent would be exported to European and US markets, while the remaining would be for the domestic market. Negi mentioned that the park has been designed complying with requirements of Social Audit Compliance of European Countries and USA to boost its exports.

Spread over 115 hectares of land, the park would be completed in three phases. In the first phase, which is to be completed by April 2008, the company plans to set up a weaving plant with a capacity of 2 lakh metres per day at an investment of Rs 450 crore.

In the second phase, it plans to set up a spinning unit at an investment of Rs 550 crore, while it aims to strengthen its processing unit in the last phase.

"We aim to complete all the phases within five years. The total investment in the textile park at the end of five years would be around Rs 1,200 crore. We expect a turnover of Rs 400 crore by the end of the current financial year and a turnover of Rs 800 crore at the end of the first phase," said Pradip Karia, chairman, adding that the total turnover from the park after completion of the project was estimated to be around Rs 2,000 crore.

The company would raise the money for the project in debt-equity ratio of 60:40. Of the equity, 20 percent would be raised from the capital market for which it plans to come out with a public issue of Rs 200 crore in the next six months.

It is also planning to apply for MoU status. The turnover of the company as on December 31, 2006, was Rs 280 crore.