SEL to invest Rs 505 cr in expansion

SEL Manufacturing Company Ltd, one of the oldest textile manufacturing houses of Punjab, is in an expansion mode. The company has decided to pump in Rs 505 crore in expansion and diversification.

The expansion would be funded through debt and equity and the company is also contemplating floating an IPO.

Talking to Business Standard, the managing director of the company, Neeraj Saluja said the land had been acquired at Machiwara in Nawashehar for creating additional capacities. The straight line plant, in addition to spinning and yarn manufacturing, will have a capacity of 10 tonne per day of terry towel that would be gradually expanded to 25 tonne per day.

"We will put up 100,000 spindles at Machiwara," said Saluja. As the textile unit needs round the clock availability of power, it would be viable to set up a captive power plant.

A 10 Mw, multi-fuel-based biomass plant which, with a connected load of 8.5 Mw (equivalent to the total power requirement of the unit), would be part of this expansion, he added.

Another power plant of similar capacity would be put up at the existing facility at Neelon (near Fatehgarh Sahib). This plant would be constructed adjacent to the factory in the premises of sick unit that was under liquidation and has been acquired by the RS Saluja Group.

RS Saluja group is a vertical integrated textile and garment group. "We export about 80 per cent of our yarn and 100 per cent of garments. The company exports to around 25 countries in Middle East and Far East countries of Asia," he added.

He said the ready base was available for the manufacture of terry towel due to the vertically integrated operations of the business. Saluja said the rapid expansion of retail sector in India has created a huge market with better margins.

He added that the demand created by the Indian retail giants might divert the Indian exporters towards the domestic markets.

"Domestic market was always there but there was a lack of efficient marketing mechanism. We can supply the bulk orders to domestic as well as overseas buyers," he informed.

The company clocked in a turnover of Rs 250 crore last year and is expecting a turnover of Rs 350 crore in the current year. With the investment, the company is projected to touch a turnover of Rs 750 -Rs 800 crore in 2-3 years.