Business Daily from THE HINDU group of publications
Tuesday, Jul 25, 2006
Business Daily from THE HINDU group of publications Tuesday, Jul 25, 2006 |
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Corporate
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Mergers & Acquisitions Spentex buys Uzbek spinning firm for $81 m Our Bureau
New Delhi , July 24 Spentex Industries Ltd on Monday announced the acquisition of Uzbek spinning firm Tashkent-To'yetpa Tekstil LLC for $81 million (around Rs 350 crore). The acquired company, which will become a wholly-owned subsidiary to be renamed as Spentex Tashkent Toytepa LLC, will give Spentex a factory in each of the Uzbek cities of Tashkent and To'ytepa with a combined total of 220,000 spindles and 236 looms, bringing the parent's overall capacity to 570,000 spindles. "Uzbekistan has cheap power, cheap labour, cheap cotton, what else do you want?" said Mr Mukund Choudhary, Spentex's Managing Director, adding the Uzbek Government had offered tax concessions and a 15 per cent discount on raw cotton. The acquisition also gives Spentex the advantage of Uzbekistan's proximity to the Eastern European markets, he added. The company also said it would be moving into the woven cotton fabric business for the first time with its newly acquired Uzbek looms. He said with this acquisition, Spentex had become India's largest yarn manufacturing company and this had been the first direct investment by an Indian company in Uzbekistan.
Talks with Egypt
Mr Choudhary also said the firm was negotiating to buy a 100,000-spindle state-run yarn factory in Egypt. "We will keep exploring opportunities that are in line with the company's strategy and create wealth for our shareholders," he said. Spentex had also recently acquired Indo Rama Textiles Ltd and Amit Spinning Industries Ltd. Recently, Citigroup Venture Capital International Growth Partnership Mauritius increased its stake in the company to 32 per cent. ICICI Securities, Spentex's sole strategic advisor for the Uzbek transaction, was also involved in Spentex's takeover of Indo Rama Textiles. Speaking about the current deal, Mr Rohit Gulati, Vice-President, ICICI Securities, said: "Uzbekistan is the second largest exporter of cotton and exports as much as 80 per cent of its raw cotton. So we saw tremendous opportunities in the country." The tax incentives offered by the Uzbekistan Government are over and above the valuation of the company, he added.
More Stories on : Mergers & Acquisitions | Textiles | Overseas Investments
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