Eastern Silk Industry plans for expansion for more export

Kolkata, Apr 12 (UNI) Eastern Silk Industires Ltd (ESI), a leading exporter of silk fabrics, textile and made-ups, after posting a net profit of Rs 38.04 crore last fiscal, plans to expand production capacity at its Anekal unit near Bangalore with investment of Rs.

52.2 crore for more export, ESI chairman S S Shah said today.

The company reported 69 per cent growth in net sales of Rs 79.70 crore in the 4th quarter of the year ended March, 31, 2006 against Rs. 47.26 crore in the corresponding quarter of 2005-04. Net profit during the period increased by 59.5 per cent to Rs. 5.36 crores from Rs. 3.36 crores in the corresponding quarter of 2004-05.

Net profit for the company for 2005-06 increased by 54.5 per cent to Rs.38.04 crore compared to Rs 24.62 crore for the year ended March 31,2005. Net sales in 2005-06 stood at Rs 387.24 crore against Rs 337.93 crore for the year ended March, 31,2005, registering growth of 14.5 per cent. The earning per share on fully diluted quity capital (post-amalgation) works out to Rs.3.98 crore in the fourth quarter. However, for full year the earning per share stood at Rs. 27.37 as against Rs.17.71 per share in the corresponding year 2004-05.

The company recently completed its first round of private placement of equity to Leverage India Fund aggregating Rs.50.50 crore. The shares were placed at a price of around Rs 250 per share.

The promoters of Eastern Silk were also subscribing to fresh equity at the same price for an aggregate amount of Rs 7 crore, added Mr Shah. The equity capital after the private placement and promoter contribution would stand at Rs 15.79 crore, added Mr Shah.

Mr Shah said the compnay's proposed expansion includes two key initiatives. The capacity for fabrics at the Anekal unit will increase by 4.5 lakh metres per annum at a cost of Rs 52.2 crore which will include double width jacquared and velvet fabrics. At the same time, ESI was planning to set up an in-house facilty for made-ups. The planned capacity was for 1500 set/day, where each set has three/four pieces. The cost of this project was Rs 16.6 crore.

The total cost of Rs 70 core was being funded by way of private placement of Rs 50.50 core, promoter quity of Rs. 7 crore and internal accruals of Rs 12 core.

Since its inception in 1946, the company was leading in export of textiles, silk fabrics and furnishing/fashions fabrics and made-ups and was listed on the National Stock Exchange.

The chairman said the company has emphasised on export and targeted about 450 to 460 crore by end of next financial year. He said bulk of the export goes to America, about 36 per cent, followed by European nations, middle east and Australia.

The wide range of textile products include silk garments,made-ups, scarves, ties, stoles, belts and other products.

Mr Shah told a news conference the rational of the expansion was to increase sales realisation (-20 per metre) from mill made production and reduction dependence on outsourced low margin handloom/powerloom production.

Interestingly, profitability from millmade fabrics was superior not just on account of better realistion but also shorter operating cycle for mill made fabrics (110days) than for handloom/powerloom (260), said Mr Shah.

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