The Hindu Business Line : Ambika Cotton plans capacity expansion

THE Tirupur-based Ambika Cotton Mills Ltd (ACML), which has chalked up plans to add value to its cotton yarn production, is setting up a new compact yarn spinning plant with a 21,000-spindle capacity. This additional spinning capacity would come in two phases.

In the phase-I, 14,000 spindles would be installed at a cost of Rs 67 crore. Term loan of Rs 50 crore would be availed through the technology upgradation fund scheme (TUFS), of the Ministry of Textiles, which will confer the five per cent interest rebate. The remaining Rs 17 crore would be met through internal accruals. Disclosing the proposal to Business Line, Mr P.V Chandran, Managing Director, Ambika Cotton Mills Ltd, said the first phase expansion would go on stream by January 2005.

The TUFS component in the expansion project would include wind energy project for 100 per cent captive consumption.

He said the balance 7,000-spindle capacity expansion under compact spinning project would be taken up in the phase-II.

At present, Ambika Cotton has a total spinning capacity of 42,000 spindles and the capacity expansion project once fully implemented would push the company's total spindleage to 63,000, of which 32,000 spindles would be of compact spinning.

ACML is seeking to capitalise on the higher price realisation opening up for the specially spun yarn using the compact spinning system. It is also targeting the domestic yarn market where the demand for specially spun yarn is expected to go up in the face of the dismantling of the quantitative restrictions in the global textile/clothing trade.

Mr Chandran maintained that his company paid greater attention to bringing down the energy cost to render its product-manufacture cost competitive in today's textile trade environment. With this idea, ACML had recently commissioned its Rs 33-crore wind energy project for a 6.6 MW capacity (with a TUFS financial support to the extent of Rs 26 crore) for captive consumption. "This wind energy project commissioned in November last is expected to bring down the energy cost for the ACML by three or four per cent," he said.

ACML which has closed its third quarter ended December 31, 2003 with a 32 per cent growth in its sale had achieved a net sale of Rs 27 crore compared with Rs 20 crore for the same period in the previous fiscal. Its net profit spurted by 87 per cent to Rs 4.24 crore (Rs 2.26 crore). Its total sale for the nine-month period was up six per cent to Rs 64.62 crore against last year's Rs 60.99 crore and the net profit was higher at Rs 9.27 crore (Rs 5.29 crore).

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