Visaka Industries to focus on textiles, plans expansion

Hyderabad: Visaka Industries, the asbestos and textiles major has announced major expansion plans with an investment of Rs228 crore which would be split between its building materials and textiles businesses. The plans are spread over three years.

Dr G Vivekanand, managing director Visaka Industries, addressing the press here said, the company would invest Rs55 crore in setting up a garments factory at the Mahindra International City in Chennai, Rs100 crore in a cotton spinning unit and Rs55 crore in a weaving unit. For the company's building materials business he announced an investment of Rs28 crore in setting up a unit in Rae Bareilly in Uttar Pradesh.

While the locations of the cotton spinning unit and weaving facility have not been finalised these are likely to come up either in Maharashtra or Andhra Pradesh, G Vivekanand said.

He said the company was reducing business dependence on building materials and was planning to become a major textile player with control over the entire chain of production.

To fund the expansion Visaka Industries is going in for issue of foreign currency convertible bonds (FCCBs) to raise $15 million (Rs65 crore) to part-finance the project. It has appointed Elara Capital of London to act as merchant bankers in charge of the issue.

The company would be listed on the London Stock Exchange after the process of raising funds was completed Dr Vivekanand said.

K V Soorianarayanan, senior vice-president, Visaka Industries, the conversion of FCCBs into equity shares would enable the company improve its borrowing capacity by another Rs70 crore. According to him the company enjoys a comfortable debt-equity ratio of 1:1.2, and would continue to maintain it even after raising debt for the proposed expansion.