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G. Gurumurthy

Company has embarked upon a major capacity expansion project.

Coimbatore , Nov. 16

The Avinashi-based S P Apparels Ltd is close to clinching a deal with the New York Life Investment Management Fund to raise private equity.

The deal is expected to be completed soon as only the technical formalities are to be tied up, according to Mr J Stanley Jothiraj, chief finance officer of S P Apparels.

The company has the option of diluting the equity to the extent of 10 per cent or it may go for issuing fresh equity to that extent to facilitate the private equity drawal, Mr Jothiraj told Business Line.

The amount of the equity fund involved in the deal might be less than Rs 40 crore or so.

The vertically integrated garment production company, which supplies to major global brands and retailers, has embarked upon a major capacity expansion project involving its garment, knitting, processing operations, besides setting up its own spinning capacity at an outlay of Rs 300 crore.

While it has already tied up Rs 100 crore through term loans from banks, the remaining project costs would be raised through a combination of internal accruals, further borrowing, private equity and possibly by way of an IPO.

Garment unit commissioned

The garment company, as part of its capacity expansion, on Thursday commissioned its third garment unit with a seating capacity of 1,000 at a cost of Rs 38 crore close to its existing plant at Kaikattipudur near Avinashi. The new unit with 6 lakh sq.ft floor area (on 11-acre site) will contribute to an additional garment production of 60,000/70,000 pieces per day, taking the company's per day garment production to well beyond 1.50 lakh pieces.

Mr P Sundararajan, Managing Director and Chief Executive Officer of S P Apparels, who was present at the inauguration of the new sewing unit, said the Rs 300-crore expansion would cover doubling its knitting fabric production facility, dyeing unit at Perundurai (from the present 12 tonnes per day to 24 tonnes), printing unit and wind mill project. Besides, setting up a50,000 spindle spinning plant at a cost of Rs 146 crore will also form a part of the expansion plans.

S P Apparels has also chalked out a plan to strengthen its newly acquired `Crocodile' garment brand and it has proposed to open eight exclusive retail stores for the brand before the end of this financial year, said Mr Sanjay Chandrasekhar, Vice-President, Crocodile Products Pvt Ltd.

More Stories on : Venture Capital | New Projects | Readymade Garments

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