Hyderabad, Oct. 31
VISAKA Industries Ltd (VIL), the Hyderabad-based Rs 214-crore building products and synthetic blended yarns manufacturer, has decided to revamp its business plans.
The company has advanced the execution of expansion in its fibre cement sheets business. It now proposes to set up two 1.1-lakh-tonne capacity units, one each at Ahmedabad and Vijayawada, at a cost of Rs 32 crore each, aggregating Rs 64 crore.
Significantly, the company's moves come in the wake of the impressive growth of over 15 per cent in fibre cement sheets (FCS) business thanks to the Government's thrust on infrastructure and rural housing.
Speaking to newspersons, the Managing Director, Dr G. Vivekanand, said the Ahmedabad unit would be ready by December next year, while the Vijayawada facility should take off by October next.
The execution of both the facilities would take the company's total FCS capacity to 6.5 lakh tonnes.
The company is currently executing expansion programmes involving a total investment of around Rs 228 crore. The expansions, involving both the divisions, would be completed in the next three years.
The ongoing expansion programme involves Rs 28 crore for building a products facility in Rae Bareilly, Rs 55 crore for a garment factory at the Mahindra International City in Chennai, Rs 100 crore for a cotton spinning unit, and Rs 55 crore for a weaving facility.
The key objective of these expansions is to reduce business dependence on building products and also to enable the company evolve as a major textile player with control over the entire chain of production, Dr Vivekanand said.
The company currently draws 60 per cent of its revenues from the building products division, while the textiles division contributes the rest.
The completion of expansion in both the divisions would enable the company bring down dependency on building products to 55 per cent and enhance the revenues from textiles to 45 per cent.
To part-finance the expansions involving a total investment of Rs 292 crore, the company proposes to raise $15 million through issue of foreign currency convertible bonds (FCCBs) within a month.
The remaining funds would be met from internal accruals and institutional lending, Dr Vivekanand said.
According to Mr K.V. Soorianarayanan, Senior Vice-President, the conversion of FCCBs into equity shares would enable the company improve its borrowing capacity by another Rs 70 crore.
The company also plans to avail the subsidy of five per cent from the Textile Upgradation Fund before availing of loans from the banks at around nine per cent, taking the effective net interest rate to just four per cent.