The Hindu Business Line : Suryalata Spinning Mills plans Rs 126-crore capacity expansion

SURYALATA Spinning Mills Ltd (SSML), a Hyderabad-based yarn manufacturer, has decided to increase its spinning capacity and also evolve itself into an integrated player by adding weaving, processing and garmenting facilities.

The move is aimed at benefiting from the emerging opportunities in the free trade regime.

Mr Mahender Kumar Agarwal, Joint Managing Director, said: "With the abolition of multi-fibre agreement from January 1, 2005 there are enormous opportunities for the textile units. EU and the US companies are increasing the outsourcing of their requirements in the free trade regime. In this connection, India is going to benefit in a big way because of its natural edge in availability of raw material, skilled labour, etc., over the competing countries in the world."

Speaking to newspersons on Thursday, Mr Agarwal said that the proposed expansion programme would also insulate the company from pricing pressure in the yarn industry.

The cost of proposed expansion and new facilities is estimated at Rs 126 crore.

The company proposes to set up 45,000 spindles at an investment of Rs 91 core.

Of this, 25,000 spindles would come up at the company's Andhra Pradesh unit located at Kalwakurthy in Mahabubnagar district.

Another 20,000 spindles would be added to the facility at Ramtek in Maharashtra.

Currently, the company has a total capacity of 64,368 spindles.

The new spindle capacity would commence production by December this year.

The company is also setting up a weaving and processing unit in Andhra Pradesh with a capacity of 50,000 metres a day at an investment of Rs 35 crore.

The company expects the project to take off by October next year.

According to Mr Agarwal, the expansion in spinning is expected to add Rs 158 crore and weaving and processing to add Rs 140 crore to the turnover; total turnover is expected to touch Rs 500 crore by 2009-10.

Having posted a turnover of Rs 162 crore in the last fiscal, the company has projected a turnover of Rs 189 crore for the current fiscal.

Mr V.K. Chakravarthy, General Manager (Finance), said that the company proposes to raise Rs 29 crore of equity, Rs 74 crore of term loans, and Rs 23 crore of internal accruals for meeting the expansion cost.

However, he said, the company is yet to finalise terms for the equity issue.

Stating that the company is also considering a proposal to set up a Rs 25-crore garments facility with a capacity of 10,000 trousers a day, he said that the company is currently in the process of finalising details.