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Our Bureau

Kolkata , June 17

VISAKA Industries Ltd is considering an $18-million foreign currency convertible bond issue to finance Rs 200-crore expansion plan in textiles and a Rs 30-crore expansion in asbestos cement sheet manufacturing capability.

Alternatively, the company will favour rights issue of an equivalent amount. A final decision is expected in the next two weeks.

The rest of the project cost will be raised through debt-financing. The overall debt equity ratio will not exceed 1.2:1.

Having registered a Rs 208-crore turnover in 2004-05, the company is considering de-merger of its building material and textiles businesses once the turnover crosses Rs 450 crore in next three years.

The Managing Director, Mr G. Vivekanand, said the company's textiles business, which contributes nearly 40 per cent of the total business, would become the mainstay following the expansion of the textiles business.

The plans include setting up an export-oriented garment manufacturing unit with a capacity of 4 million pieces per annum at Mahindra Special Economic Zone near Chennai at an investment of Rs 50 crore. The project will be implemented in 2005-06.

"The advantages of setting up this unit in Chennai are that it is near the port, access to highly skilled labourers and the availability of fabrics from the Tirupur-Coimbatore belt. We are already in discussion with some foreign brands for marketing of our products from this unit," Mr Vivekanand said.

Visaka also plans to set up a Rs 50-crore weaving unit near Mumbai to manufacture fabrics with air jet spun yarn and supply the product to marketing partners in Europe who will in turn brand the product and market it in the US.

"With the end of the quota system, the demand for home textiles made with air jet spun yarn is expected to go up manifold," he said, adding that the proposed weaving unit will have a capacity of 5 million meters per annum.

"In this industry, the turnover is around twice the capital investment. Since we will be having marketing tie-ups we do not anticipate any problem in marketing the fabrics from this unit. Work on this unit will commence in the financial year 2005-2006," he added.

As part of backward integration, the company is planning to set up a 100 per cent cotton yarn unit with air jet spinning technology near Mumbai at an investment of Rs 100 crore.

The unit will have a capacity equivalent to 50,000 spindles. The yarn produced will be exported to the US or supplied to export oriented fabric manufacturers in domestic market. The project will be taken up in 2006-07.

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