Aarvee Denims ups borrowing cap to Rs 500 cr

The Aarvee Denims and Export (ADEL) board has passed a resolution to raise the borrowing limit to Rs 500 crore from Rs 75 crore at present.

"We have passed a resolution to increase in limit for creation of charge, mortgage, hypothecation on assets of the company pursuant to provisions of the section 293 (1) (a) of the Companies Act, 1956 up to Rs 500 crore. This will help fuel our expansion plans," Vinod P Arora, chairman and managing director, Aarvee Denims, said.

"We are not looking for any immediate borrowings as we have recently enhanced our authorised share capital from Rs 35 crore to Rs 50 crore," said Arora.

The Ahmedabad-based denims major has lined up a Rs 100 crore expansion plan to meet the export demands. Its plans to raise capacity by 20 million metres to 64 million metres per annum at a cost of Rs 40 crore.

Aarvee Denims has also diversified its product range by foraying into manufacturing of bed linens, pillow covers, cushions and tablecloth. "The home furnishing segment is a very lucrative segment for us. Commercial production of home furnishings will commence by the end of next financial year," Arora said.

The company has also enhanced its spinning capacity, including ring spinning, to 17,000 tonne a year.

Aarvee aims to double its turnover to Rs 500 crore in the next two years. Its revenues for the financial year 2004-05 were at Rs 236.81 crore.

Denim sales stood at Rs 170 crore in the year ended March 2005, a growth of 30 per cent over previous year.

Recently, Germany's Deatsche Investitions und Entwicklungsgesellschaft mbH (DEG), a development financial institution decided to pick up a 14.99 per cent stake in Aarvee for Rs 45 crore.