The Hindu Business Line : Bannari Amman Spng plans public issue

(From left) Mr S.V. Arumugam, MD, Bannari Amman Spinning Mills, with Dr S.V. Balasubramaniam, Chairman, and Mr S.K. Sundararaman, Executive Director, at a press conference held in Mumbai on Thursday. - Paul Noronha

Mumbai , Oct. 13

BANNARI Amman Spinning Mills Ltd is entering the capital market to raise between Rs 80-95 crore to fund its expansion plans.

The company is coming out with a public issue of 70 lakh shares at a face value of Rs 10 each through the 100 per cent book-building route, which will open on October 19 and close on October 25.

The price band has been fixed at Rs 115-135. The issue will constitute 44.44 per cent of the post-issue paid-up capital of the company. The book-running lead managers to the issue are IL&FS Investsmart and ICICI Securities. The registrar to the issue is Intime Spectrum Registry.

Up to 50 per cent of the issue will be issued to qualified institutional buyers, 15 per cent to non-institutional bidders and 35 per cent to retail institutional bidders.

The total cost of the expansion and forward integration is estimated at Rs 290 crore, which will be funded through a rupee term loan of Rs 175 core (under TUFS) from UTI Bank at an effective interest cost of 3.65 per cent per annum. The remaining will be funded through issue proceeds and internal accruals.

The company is a manufacturer of cotton yarn. The capacity expansion in Dindigul, Tamil Nadu, will add 75,600 spindles to the existing capacity of 29,232 spindles, which produces 16 tonnes of cotton yarn per day. The increased capacity will produce 45 tonnes of medium and high-count yarn per day.

The weaving division in Coimbatore has 28 Sulzer projectile machines, which will increase to 88 looms to produce 10,000 metres of woven fabric per day.

The processing unit will have a proposed installed capacity of 30,000 metres per day and will be predominantly used by the garment and home textile division.

The company is augmenting its power generation capacity by 10.5 MW to its current 5 MW by setting up more windmills.

According to Mr S.V. Arumugam, Managing Director, Bannari Amman Spinning Mills Ltd, its top 10 customers account for 30 per cent of its turnover, exports constitute 24 per cent and the rest comes from domestic sales. The move to expand is mostly in response to the end of the quotas, a greater demand from customers and extremely low cost of funds available now.

For the fiscal ended 2005, the company notched total income of Rs 75.6 crore (Rs 71.93 crore); net profit Rs 11.53 crore (Rs 7 crore).

The company is part of the Rs 1,200 crore-turnover Coimbatore-based Bannari Amman Group.

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