The Hindu Business Line : Visaka Ind plans Rs 228-cr expansion; to focus on textiles

VISAKA Industries Ltd (VIL), the Hyderabad-based asbestos and spinning products major, has chalked out a major expansion programme involving investments to the tune of around Rs 228 crore for both the divisions spread over the next three years.

The key objective is to reduce business dependence on building products and also to evolve as a major textile player with control over the entire chain of production, said the VIL Managing Director, Dr G. Vivekanand.

Addressing newspersons here on Saturday after the board meeting, he said the expansion programme involves Rs 28 crore for building products facility in Rae Baraeli, Rs 55 crore for garments factory at the Mahindra International City in Chennai, Rs 100 crore for cotton spinning unit and Rs 55 crore for weaving facility.

Dr Vivekanand said the company is yet to finalise the location for its cotton spinning unit and weaving facility. These units would come up either in Maharashtra or Andhra Pradesh, he said.

To part-finance the project to the tune of around Rs 65 crore, the company proposes to go in for issue of foreign currency convertible bonds (FCCBs) for raising $15 million (Rs 65 crore). The company has appointed Elara Capital of London to act as merchant bankers.

The entire process of raising funds through FCCBs would be completed in the next 45 days and they would be listed on the London Stock Exchange, Dr Vivekanand said.

According to the VIL Senior Vice-President, Mr K.V. Soorianarayanan, the conversion of FCCBs into equity shares would enable the company improve its borrowing capacity by another Rs 70 crore. The company also plans to avail itself of the subsidy of 5 per cent from the Textile Upgradation Fund before availing itself of loans from the banks at around 9 per cent.

Stating that the company currently enjoys a comfortable debt-equity ratio of 1:1.2, Mr Soorianarayanan said the company would continue to maintain it even after raising debt for the proposed expansion.

Though the proposed FCCBs would initially fall under debt category, they shift to equity on their conversion. Further, the company also plans to clear the existing debt through internal accruals, he said.

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