Visaka Industries lines up Rs 50-crore expansion

.Visaka Industries has chalked out a Rs 50 crore expansion plan for both its spinning as well as asbestos divisions. The company is contemplating to go in for a combination of debt and equity mop- up to finance its expansion plans.

"We have not yet decided on how to raise the money, but a decision will be taken within a month's time. We are also considering an option to go for equity placement," G Vivekanand, the managing director of the company, said at a press conference here today.

The company is setting up a new spinning unit with 576 spindles capacity at Nagpur at a project outlay of Rs 32 crore. The project works have already commenced and the company expects to begin commercial production by October this year.

The new unit will have the benefit of reduced import duty announced for project imports, and the borrowing for this projects will enjoy concessional interest textile fund.

As a result, the effective interest rate on the borrowings is expected to be around five per cent, Vivekanand explained.

Visaka at present has a spinning capacity of 1,270 spindles, which is being operated with a 55 per cent utilisation. The company exports about 45 per cent of the fine count yarn manufactured.

The company also plans to set up an asbestos cement sheet manufacturing plant at Tumkur near Bangalore. It has already procured the land for the project, which is estimated to cost around Rs 18 crore.

The civil works for the project are expected to start by the end of February 2004. The recent scaling down of import duty on asbestos fiber from 25 to 20 per cent and abolition of special additional duty on imports should benefit us, Vivekanand hoped. At present, the company has a 2.4 lakh tonnes per annum asbestos sheets capacity.

Wit the its spinning division performing well, the company has posted a 13 per cent rise in net profit for the nine months ended December at Rs 7.85 crore as against Rs 6.95 crore posted for the corresponding period last fiscal.

Profits would have been higher by Rs 2.67 crore if not for the losses suffered by its newly set up plant at Midnapore in West Bengal. Total income for the first nine months too went up by 13 per cent to Rs 117 crore from Rs 103.7 crore.