Suryalakhsmi Cotton Mills plans to enhance its spinning capacity by 50,000 spindles from 65,000 spindles with an investment of Rs 150 crore. The company intends to raise Rs 80-100 crore through the Central Government-sponsored Technology Upgradation Fund Scheme (TUFS) and the rest will be tied up through internal accruals.
Paritosh Agarwal, Managing Director, Suryalakshmi Cotton Mills, said the additional spinning capacity coming up at Ramtek, in Maharashtra, will be completed in two phases by 2014-end.
Interest subsidy
“Besides the four per cent interest subsidy under the TUF scheme, the Maharashtra Government offers interest subsidy of up to 12.5 per cent under its new textile policy,” he said.
The company’s spinning unit in the Vidarbha region qualifies for the State interest concession of 12.5 per cent. This makes cost of funds even cheaper for the company. Suryalakshmi Cotton recently commissioned a 25-MW captive thermal power plant at its denim plant at Ramtek with an investment of Rs 130 crore. It had raised debt of Rs 85 crore and promoters’ equity investment of Rs 15.6 crore, besides tapping internal accruals to fund the power project.
As of September, it had long-term debt of Rs 228 crore, of which Rs 140 crore was raised through the TUF. “With the commissioning of the power plant, the cost of electricity will drop to Rs 4.20 a unit from the Rs 7 we pay currently. The full benefit of lower power costs will be reflected from the next quarter as the power plant is just stabilising,” said Agarwal.
Fuel Supply pact
The company is close to signing a fuel supply agreement with Western Coal Fields of Nagpur for sourcing coal.
“We will use 50 per cent of the power produced for captive purposes and sign an agreement with the Government or private power trading companies,” he said.
suresh.iyengar@thehindu.co.in