The Hindu Business Line : Eastern Silk hopes to complete merger process shortly

EASTERN Silk Industries Ltd (ESIL) expects to complete all formalities in the next few months regarding the implementation of a scheme of amalgamation of Eastern Jingying Ltd and Sstella Silks Ltd with it.

The company has received approval of the scheme from the Calcutta High Court, and is now awaiting an order from the Karnataka High Court.

The amalgamation scheme is part of ESIL's plan to consolidate its business under one roof and also to restructure ESIL's paid-up capital base.

As principal promoter of these companies, the nature of whose business is similar, the Chairman and Managing Director of Eastern Silk, Mr S.S. Shah, feels that all stakeholders in the company would stand to benefit following the amalgamation.

Mr Shah said that the company has moved from handloom sector and elevated itself to machine-made fabric with advanced technology at its unit at Ankel in Karnataka, enabling it to look at new horizons to focus on the top-end of the market. However, the proposed amalgamation will help raise ESIL's paid-up capital from about Rs 7.15 crore to about Rs 14 crore. Being a debt-free and dividend paying company, ESIL may further raise its equity capital, he indicated.

Eastern Silk's Ankel unit has capacity to dye, print and embroider about five million metres of silk fabrics per annum. In addition to its own weaving facility, it sourced fabrics from Sstella Silk Ltd, while Eastern Jingying supplied silk yarn.

While it imports from China about 70 per cent of its total annual requirement of about nine lakh tonnes of silk yarn, the balance comes from its own spinning mill.

Mr Shah said that ESIL would continue to market its fabric, made-ups and garments in the developed countries. In fact, silk has always fascinated the fashion world. And with use of the latest technology to weave the wonder fabric, it will always be in demand.

He said that ESIL of its own has no immediate plan to diversify in no-silk textile products. But if opportunity comes, it might consider acquiring running textile mills. He reiterated that the company preferred to grow through greenfield projects. ESIL has ended the fiscal 2004-05 with a turnover of about Rs 294 crore and a net profit of about Rs 24 crore, as against previous year's turnover of about Rs 272 crore and a net profit of about Rs 15 crore.

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