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G. Gurumurthy

To capitalise on acquisition of Turkey plant

Coimbatore , April 17

The Coimbatore-based Super Spinning Mills Ltd, which has clinched a Rs 30-crore deal to buy-out a whole spinning plant from Turkey last month, is on a capacity consolidation binge.

The company has chalked out plans to enlarge its spinning capacity from present 1.35 lakh spindles to close to two lakh spindles by end of 2007 through a mix of acquisition of running spindles and new spindle investments.

The spinning plant, the 1999/2000 model Reiter-made ring spinning machinery (in all 30,576 spindles of G-30/G-33 frames), along with the entire pre/post-spinning equipment right from blow-room instruments all in running condition, was bought from Turkey's Abalioglu group and will be relocated in the vicinity of the company's existing plant at Hindupur in Andhra Pradesh where it already owns twospinning units, according to top officials.

The deal to buy the Turkish plant, finalised last month, is part of the Rs 46- crore project chalked out to establish its new spinning plant under the banner Super Sara which will remain within the Super Spinning Mills management, said Mr Sumanth Ramamurthy, Managing Director, Super Spinning Mills.

To facilitate the relocation, his company has bought 97 acres of land to set up the spinning shed. The first phase of relocation likely to commence by June will be completed by November and production will start from December this year, Mr Ramamurthy told Business Line.

Additional spindleage

Besides the acquisition of the used spinning plant from Turkey, the company has also planned to newly acquire an additional 24,000 spindles for which it had placed orders with the domestic spinning machinery major Lakshmi Machine Works.

This additional spindleage, estimated to cost Rs 40 crore, too would come up at the same unit where the relocated Turkish plant would be situated.

The company's Executive Director, Mr Seethapathy, said his company, which enjoyed good yarn marketing, needed an additional spinning capacity urgently to cater to the growing demand. Besides, the low investment cost, as the used spindles cost Rs 3,000 per spindle, compared to the cost to be incurred on investing in new spindles would be an advantage.

The average per spindle cost to be incurred by the company by way of acquiring the Turkish spinning plant works out to Rs 15,000 as compared to the Rs 18,000 being quoted for the equivalent technology ring spinning frames in the market, he added.

The relocation of the Turkish spinning machines, once completed, will lift up the total spindles working under Super Spinning to 1.65 lakh from the current 1.35-lakh spindles.

Commissioning of plant

The commissioning of the plant fitted with the imported spindles would also lead to increasing its per day yarn production by 10,500 kgs from the current 80,000 kgs and its turnover would go up by Rs 50 crore. This will reflect in the company's financials during the last quarter of 2006-07, Mr Seethapathy said. The company has chosen to increase spindle capacity under its spinning plants in Hindupur with a view to take advantage of low power cost prevailing in Andhra Pradesh. Mr Ramamurthy said the average power cost incurred by his spinning plants is cheaper by 70 paise per unit.

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