Suryalakshmi to issue pref shares to UTI Venture Funds

Suryalakshmi Cotton Mills Limited (SCML) proposes to issue 14.28 lakh equity shares of Rs 10 each on a preferential basis to UTI Venture Funds at a price of Rs 245 per share.

This represents 10.7 per cent of the expanded (post-issue) equity share capital of SCML. The company's board has approved the proposal and the issue would be made in accordance with the Sebi guidelines.

SCML executive director, Parithosh Agarwal, told Business Standard that the company planned to utilise the funds to part finance its expansion plans. SCML would be holding an emergency general meeting of its shareholders on January 19, 2006, to obtain their consent in this regard.

Agarwal said that the company had embarked upon a Rs 180-crore expansion plan, the first phase of which was completed in August this year.

The first phase, involving an investment of Rs 40 crore, comprised expansion of the company's denim unit capacity to 30 million metres annually and its spinning division to 23,000 spindles. The company has a denim unit at Ramtek in Maharashtra and a spinning mill at Amangallu in Mahabubnagar district of Andhra Pradesh.

The second phase involves further expansion of the denim unit capacity to 40 million metres and installation of an additional 25,000 spindles in the spinning division.

This apart, the company would be making its foray into manufacturing of garments by setting up a 10,000 pieces per day capacity garments manufacturing unit. The Rs 140-crore second phase expansion plan is scheduled to be completed by March next year.

Agarwal said that IDBI and SBI had extended term loans of Rs 70 crore and Rs 60 crore respectively for the expansion project. Besides, the company had raised Rs 15 crore through internal accruals while an amount of Rs 35 crore would be raised through the issue of preferential shares.

Stating that the future focus of the company would be on garments manufacturing and retail marketing, he said that SCML planned to further expand its capacities at a cost of over Rs 200 crore next year. "We will be finalising the further expansion plans soon," he added.