The Hindu Business Line : Spentex on path to recovery

THE ailing Baramati-based Spentex Industries Ltd, manufacturers of cotton yarn, which has an accumulated loss of Rs 55 crore, seems to have found itself a cash-rich partner in the Delhi-based CLC Global Ltd.

CLC took over Spentex from the RPGs in January this year. Against the public offer price of Rs 6.60 made at the time of the takeover, the share is currently quoting close to Rs 15 on the BSE.

Mr Mukund Choudhary, Managing Director, Spentex Industries, told newspersons after the annual general meeting of the company that CLC had taken over Spentex with its debt of Rs 55 crore and had brought the debt level down to Rs 30 crore since takeover. He noted that it had been able to bring down the debts through one-time settlement with the existing lenders. He said the company plans to wipe out the accumulated losses within the next couple of years. For this to happen, Spentex would be merged with the CLC Corporation, an exporter of raw cotton, yarn and fabrics, so as to give a boost to its revenues.

He said CLC Corporation would function as a division of Spentex. The modalities were still being worked out and would be conveyed to the shareholders in the next 15 days. The directors had agreed for the merger during the board meeting, he said.

Spentex had been registered as a BIFR case and CLC had applied for deregistration of Spentex from that category. He said the deregistration is expected within a few weeks.

Mr Choudhary said Spentex, which posted a net loss of Rs 1.84 crore for the year ended 2003-04 against a loss of Rs 11.17 crore for 2002-03, is expected to touch a revenue of Rs 60 crore for the current fiscal.

He said the merged entity, Spentex and CLC Corporation, is expected to garner revenue of Rs 180 crore for the current year, with Spentex's contribution touching Rs 60 crore.

He said for this to happen fresh investment to the tune of Rs 70 crore, within the next 18 months and doubling of the existing capacity would be carried out.

Of this, Rs 30 crore is expected to come in the form of equity and the rest as debt.

For the current year the company would be looking at value addition in spinning and processing and further down would look at processing of fine garments.