The Hindu Business Line : Eastern Silk to set up made-ups unit at Bommasandra

EASTERN Silk Industries Ltd, a major exporter of silk fabrics, furnishings/fashion fabrics and made-ups, is setting up a plant for the manufacture of silk made-ups at Bommasandra on Hosur Road.

The company is also expanding fabric capacity at its Anekal plant (near Bangalore) from the existing 6 lakh metres per annum to 8 lakh metres in the first phase, and 12 lakh metres in the second phase. The estimated Rs-70 crore investment on the expansion-cum-forward integration programme is expected to ensure higher value addition.

Mr S.S. Shah, Chairman and Managing Director, said the plant would be fully operational in 12-15 months, and would utilise fabric manufactured at Anekal, as well as those procured from the market.

On funding, Mr Shah said the company was evaluating various debt and equity options, including an FCCB (foreign currency convertible bond), private equity placement and/or term loans. He said talks were on with merchant bankers like SBI, ICICI and Anand Rathi Consultants, and a final decision would depend on the rates available. He put the company's existing debt-equity ratio at 0.8:1.

Mr Shah said the excess fabric capacity at Anekal, after meeting the requirements of the Bommasandra made-ups plant, would be earmarked for home furnishings, for which Eastern Silk has a ready market. He said that the company had a niche market for home furnishings abroad (47 countries), which it wants to retain for strategic reasons.

According to Mr Sundeep Shah, Director, Eastern Silk has made a conscious shift from handlooms to machine-made fabrics.

Net doubles: Commenting on the company's first quarter results, the CMD said net profit had doubled to Rs 8.35 crore from Rs 3.95 crore achieved during the same quarter last financial year.

The topline growth has shown 33 per cent increase to Rs 86.65 crore (Rs 65.17 crore). Mr Shah attributed the vast improvement to higher value addition and increasing share of machine-made fabrics in the production line. Sales and net profit for the year ended March 31, 2005 were Rs 294.57 crore and Rs 23.92 crore respectively.

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