Pratibha Syntex to invest Rs 349 cr for terry towel project

The Rs 345 crore Pratibha Syntex (PSL), an Indore based apparel major, has chalked out plans to make its foray into the terry towel business by end of 2007.

Talking to Business Standard, Shreyaskar Chaudhary, vice chairman and managing director of PSL, said, "We will be investing Rs 349 crore in four different projects that are ultimately targeted towards setting up a world class terry towel unit using organic cotton".

The company will be setting up an open end yarn, knitting and dyeing unit, a captive power station and terry towel unit.

Emphasising on the use of organic cotton in terry towel, he said, "We are aiming to secure a niche position in the terry towel market in India."

According to the company, organic cotton which is environment friendly product will open ways for a new alternative to the health cautious people.

The terry towel segment has an annual growth rate of 25 percent on an average.

He further said, "To procure more raw material of organic cotton for the upcoming terry towel project we had already made arrangement in Rajasthan, Orissa and Maharasthra."

Currently, the company has contract farming arrangement with the local farmers of Madhya Pradesh (MP) covering 35000 acres.

"We will further increase the land under organic cotton cultivation upto one lakh acres in a year's time from current 35000 acres", said Chaudhary.

"We are investing Rs 217 crore in first phase in setting up a terry towel unit at Pithampur Special Economic Zone in MP," said Chaudhary.

He further said, "The terry towel unit will have an annual capacity of 12000 tonne."

The company has already received the necessary clearance from the state government.

He said, "We will also set up a open end yarn and expand our present knitting & dyeing unit at its current Indore facility with an investment of Rs 54 crore and Rs 60 crore respectively."

The organic cottons will be processed in this unit and will be supplied to terry towel unit.

Currently the company's knitting capacity is 5,500 tonne annum while dyeing is 4,700 tonne per annum which will be increased to 2,800 tonne per annum for both knitting and dyeing after the new units are setup.

"We are having a backward integration in order to provide a better quality material for our terry towel unit," added Chaudhary.

The company is also setting up a gas based captive power station with an investment of Rs 18 crore to cater the power requirement for its terry towel unit.

"We have entered into gas supply arrangement with GAIL to supply gas for our power station," said Chaudhary.

For the entire project we have secured Rs 233 crore from a consortium of banks with State Bank of India as lead banker, informed Chaudhary.

He further said, "The remaining Rs 116 crore will be raised by means of equity."

When asked whether the company intended to raise fund from public, he said, "Presently we are not looking at that option."

The open end yarn, knitting and dyeing unit will be commenced by April 2007.

While the terry towel unit will be commercially commenced by October 2007.