RSWM acquires 48.17% in Cheslind Textiles

The Rs 27.8-crore acquisition is part of RSWM Ltd's plan to scale up its yarn operations.

RSWM Ltd, part of the LNJ Bhilwara Group, today announced acquisition of 48.17 per cent stake in Bangalore-based Cheslind Textiles for Rs 27.8 crore.

The company will come out with the mandatory 20 per cent open offer shortly. If the offer is fully subscribed, the company's investment for the acquisition will be Rs 39.3 crore. ICICI Securities is adviser to RSWM.

The acquisition is part of the company's plan to scale up its yarn operations. RSWM, formerly Rajasthan Spinning and Weaving Mills, will add another 64,500 spindles taking it to 360,000 spindles.

The acquisition benefits the company with products that include super fine count cotton yarns and also provides it with an established foothold in the international market.

The company believes that it will be able to generate good returns on its investment in Cheslind Textiles keeping in view that the acquisition cost per spindle is Rs15,500 compared with Rs 25,000 per spindle that will be required if such a plant is established on a green-field basis.

Cheslind Textiles is a cotton yarn manufacturer and has a 64,512-spindle operation based out of Bangalore. For the first three quarters of the current financial year, it reported revenues of Rs 94.33 crore

"The acquisition will augment our size, product mix and geographical presence. We remain positive on the outlook for the yarn sector going forward and such an initiative demonstrates our intentions to continually grow this business," said Riju Jhunjhunwala, joint managing director, RSWM.

RSWM, manufacturer and exporter of synthetic spun yarn, has its plants in Rajasthan.

The company also has a garments unit in Karnataka producing 90,000 metric tonne of yarn and about 12 million metres of fabric annually.