Priyadarshini on Rs 40cr spread

Priyadarshini Spinning Mills Limited, engaged in the production of cotton and synthetic yarn, has embarked on a Rs 40-crore modernisation-cum-expansion plan that is expected to be completed by March 2006.

The company has also applied to the Securities and Exchange Board of India (Sebi) for a rights issue of 37.8 lakh equity shares to raise Rs 9.45 crore for meeting its long-term working capital requirement and also to get listed on the National Stock Exchange (NSE).

The company, which has manufacturing units in Medak and Prakasam districts in Andhra Pradesh, is expanding its installed capacity from the existing 60,000 spindles to 82,000 spindles, and increasing the capacity of its dye house from 45 tonnes to 135 tonnes per month at a cost of Rs 29 crore. It is also modernising its units at a cost of Rs 11 crore.

The expansion-cum-modernisation project will be funded through a loan component of Rs 32 crore and internal accruals of Rs 8 crore.

Priyadarshini managing director Harish Cherukuri told newspersons here on Tuesday that modernisation of the manufacturing facilities would help the company reduce its cost of operation by 10 per cent from Rs 6 to Rs 5.40 per spindle. In fact, he said, the company was in a continuous expansion mode and had spent about Rs 40 crore in the last four years in enhancing its capacity.

Cherukuri said that Priyadarshini has sought Sebi approval for a rights issue at a ratio of three shares for every five shares held. The equity shares of Rs 10 each would be issued at a premium of Rs 15 per share. The current book value of the company's share stood at Rs 44.36. The promoters have one-third share in the company's equity capital of Rs 6.3 crore.

Following the capacity expansion, he said, Priyadarshini would be posting a turnover of Rs 170 crore. Last fiscal, the company registered a turnover of Rs 139.71 crore and a net profit of Rs 2.39 crore.

When compared to the turnover of Rs 142.83 crore in 2003-04, the company's turnover had declined last fiscal. The decline was attributed to reduction in excise duty on yarn, a change in the product mix, and also due to some export-oriented job works undertaken by the company.