The leading integrated player in the textiles sector in India, Rajasthan Spinning and Weaving Mills Ltd (RSWM Ltd) has announced that it had concluded a transaction to acquire 48.17 percent stake in Bangalore-based Cheslind Textiles Ltd for Rs 27.8 crore, RSWM joint managing director Riju Jhunjhunwala said here on March 18.
Cheslind Textiles is a 100 percent export-oriented unit manufacturing cotton yarn with a turnover of about Rs 120 crore, while the acquisition deal would make RSWM one of the top yarn manufacturers in terms of the number of spindles in the country.
The MD clarified that company plans to keep Cheslind as a subsidiary company and not merge it with RSWM, while the consolidated account for RSWM for FY’08 would reflect the figures of the acquired company.
The deal is set to bring in products including super fine count cotton yarns and would also provide RSWM with an established foothold in the international market; whereas an additional 64,500 spindles under RSWM will take its total spindlage to about 360,000 spindles.
However, RSWM believes that it will be able to generate good returns from Cheslind as the acquisition cost per spindle is Rs 15,500 compared to Rs 25,000 per spindle that will be required if such a plant is established on a green-field basis.
Further for the next three years, the board of the company has approved a capital expenditure of Rs 325 crore in addition to its existing approved capex of Rs 575 crore taking the total to Rs 900 crore.
RSWML has already set up a garment manufacturing unit this year in Bangalore, which would primarily cater to the export market and further the unit has commenced trial runs and is expected to commence commercial production by 2007-08.
Source :bharat textile