|Acquisition in Uzbekistan catapults Spentex as the Indias largest spinning enterprise|
|In conversation with Mr. Mukund Choudhary ,MD Spentex Industries|
Spentex Industries recently took over Indo Rama Textiles (IRTL) and Amit Spinning Industries (ASIL) and Tashkent Toytepa Tekstil. It made the first Qualified Institutional Placement (QIP) by any Indian company after Sebi notified the fresh guidelines. To know more about the company Capital Markets Darshan Singh Bagga spoke to Mr. Mukund Choudhary ,MD Spentex Industries Excerpts:
What is the present product mix of the company and what will it be post these acquisitions?
Kindly give deal values of the acquisitions and means of finance?
Considering all acquisitions the debt equity ratio of the Company is 1.75. The major cost of debt is between 8.5% to 9.5%.
Pursuant to Honble High Court, Bombay order paid up share capital of the Company reduced by an extent of 50% and paid up capital reduced from Rs. 22,22,00,090/- to 11,11,01,350/-. The Company has issued 82,74,465 equity share of Rs. 10/- each to partners of CLC Corporation and Share Capital of Company increased from Rs. 11,11,01,350/- to 19,38,46,000/-.
The company has issued 2,02,50,000 equity shares of Rs. 10/- each at premium of Rs 26.54 of each shares to Citigroup Venture Capital Venture Capital International Growth Partnership Mauritius Ltd (CVCI) and promoters of the company. The Share Capital increased from Rs. 19,38,46,001/-to 39,63,46,000/-
Pursuant to Hoble High Court, Delhi order, Company has issued one equity share of Rs. 10/- each in proportion to one equity share to the members of CLC Global Ltd., the Share Capital of Company increased from Rs. 39,63,46001/- to Rs. 57,45,91,910/-
Company has issued and allotted 17,50,000 equity shares to CVCI , therefore share capital of Company increased from Rs 57,45,91,910/- to Rs 59,20,91,910/-
Company has also issued 75,00,000 equity shares to Qualified Institutional Buyer (QIB) at a price of Rs. 62.13 per shares. Therefore the share capital of the company increased from Rs 59,20,91,910/- to Rs.66,70,91,910/-.
After merger of IRTL with Spentex Industries Limited, the Company has to issue 90 shares for every 100 shares of IRTL to the shares holders of IRTL i.e. 44,83,957 shares amounting of Rs.4,48,39,570/- and therefore, after merger of IRTL with SIL the share capital of SIL will increase from Rs. 66,70,91,910/- to Rs.71,19,31,480/-
The Company is under expansion mode / acquisition mode and the cost of expansions and acquisitions is being financed by Equity & Debt. As soon as the repayment of debts would be completed the EPS of the Company will go up.
Throw some light on your acquisition of Tashkent-Toyetpa Tekstil
There is substantial rise in interest cost, while depreciation costs are also rising. But the company appears to have not been able to scale up revenues (which have actually come down), margins etc, and going by its unaudited results for the quarter ended June 2006.
Increase in interest cost is mainly attributable to investments and creating new capacities. Depreciation expenses has increased due to the fact that the Company has revised the estimated useful life of spindles acquired during the last quarter of previous year and certain other plants and machinery located at its manufacturing facilities. The EBIDTA of the Company is almost same compare to corresponding quarter of previous year. The revenue came down due to low focus on low margin trading activities. Further, on consolidated basis the EBIDTA is improving.
Kindly share with us the details of Contract manufacturing carried out for Bombay
Dying and Manufacturing Company (BDMC). Do you expect scaling up of revenues on this
account? Are there plans for such contract manufacturing for other reputed players?
No, the Company do not expect scaling up of revenues on this account. No other comments.
What is your outlook on cotton prices for the current year? What quality of cotton
do you use for your production, what is the average price of cotton procured for the
current year? How many months inventory do you hold at present?
What are your companys vision in terms of growth in revenues and profits (a)
in FY 2006-07 and (b) over the next five years?