Hyderabad-based Suryavanshi Spinning Mills Limited has embarked upon a Rs 120-crore expansion plan, which includes setting up of a greenfield yarn production unit at a cost of about Rs 80 crore, a Rs 10-crore garment manufacturing unit and enhancement of its existing capacity with Rs 30 crore.
This apart, the company is planning to set up a 25 Mw coal-based captive power plant involving an investment of Rs 135 crore.
The greenfield facility will come up near Jangoan in Warangal district, about 100 km from here. "We are expecting to achieve financial closure for the project by April 2011 and commence commercial production by the first quarter of 2013," executive director, J K Agarwal, told Business Standard.
With regard to the proposed power project, he said the company had applied to the state and central governments for the necessary clearances. He was hopeful it would get the environmental clearance and obtain fuel linkage by March 2011.
Agarwal said 30 per cent of the new 35,000-spindle capacity yarn production unit would be funded through internal accruals and the remaining amount would be raised through debt. An area of 55 acres had been identified for the new unit where the power project would also be established.
Suryavanshi, which had accumulated losses of Rs 5.56 crore till 2009-10, is set to come out of the red this year. The company posted a turnover of Rs 188.65 crore and an operating profit of Rs 3.05 crore last year.
"The textile industry recovered faster than other sectors from the global recession and we are expecting a turnover of Rs 300 crore and a net profit of about Rs 17 crore this year. Thus, we will not only be able to wipe out our accumulated losses but also post a net profit in 2010-11," Agarwal said.
During the first half of the current year, the company posted a turnover of Rs 126 crore. In the third quarter, for which the financial results are yet to be announced, the company is likely to post a turnover of around Rs 80 crore.
According to Agarwal, improved international scenario coupled with increased realisation enabled the company to enhance its yarn and garments production and exports.
"International demand is good and our turnover from exports is expected to touch Rs 135 crore in the current year as against Rs 33 crore last year," he said, adding the earnings from export of garments would be around Rs 35 crore.
Suryavanshi currently has three yarn production units, two in Andhra Pradesh and one at Rajna in Madhya Pradesh, with a combined capacity of 100,000 spindles a year. Its products are now being exported to the US, Europe and many Asian countries including Japan and China.
