Investment banking sources said the company will sell around 10% equity for Rs 30 crore to fund its expansion plans. The deal is likely to be sealed this year.
The company plans to invest Rs 325 crore for enhancing capacity.
It will raise Rs 225 crore as debt, Rs 30 crore through sale of promoters' equity and the rest from internal accruals, apart from PE funding.
Babubhai Jain, chairman and managing director, Nakoda Textile Industries told DNA Money, “We are looking for PE funding, but nothing has been finalised yet.”
Jain said the company's proposed continuous polymerisation plant of 1 lakh tonnes per annum (tpa) would be operational by mid-2009. The facility would help it backward integrate. Additionally, Nakoda is expanding its partially oriented yarn (POY) spinning capacity from the current 30,000 tpa to 1,00,000 tpa.
Jain said, “This project will be a step towards de-risking the business model. On implementation, it will eliminate dependence on outsourced polyester chips and offer better value addition, due to continuous polymerisation.”
The company caters to the small and medium texturisers and has 3% market share in the POY segment and 20% share in the FDY segment. POY and FDY manufacturing are highly capital intensive and require hi-tech plants.
Source: sify / Yarns and Fibers