RSWM to invest Rs 900 cr by 2009 on expansion

New Delhi, July 27: Textile major Rajasthan Spinning and Weaving Mills (RSWM) today said it will pump in Rs 900 crore in the next three years, to expand its capacities and improve the efficiency of its units, thereby maintaining its leadership position in the textile sector.

RSWM expects to invest Rs 900 crore over the next three years in enhancing yarn capacities, establishing thermal power plant, setting up denim operations, and regular capex requirements.

The capital expenditure of up to Rs 575 crore has earlier been approved by the Board of Directors. The balance proposal of Rs 325 crore was also approved, taking the total Capex initiatives to Rs 900 crore.

Finances for the entire Rs 900 crore capex plan will be done through a combination of TUF loans and internal accruals.

''We are pleased to report that FY2007 has commenced on a positive note. The yarn sector is witnessing better local and global demand trends which are expected to continue for rest of FY2007. New expansions are also being implemented to ensure visible growth momentum over the next five years. Given the capex plans being undertaken by the Company and the encouraging operating scenario for the textile sector, going forward, the outlook remains optimistic,'' RSVM Joint MD Riju Jhunjhunwala said.

The company expects capex initiatives in yarn to contribute Rs 145 crores annually to the turnover.

Once the yarn-related expansion plans are commissioned, the company's total spindlage will be doubled over the next three years, it will increase from 242,000 spindles to 397,000 spindles and total yarn production capacity will increase from 68,000 MT to 140,000 MT.

Yarn has been the primary business for the group and the company plans to continue focus on strengthening yarn capacities in coming years. A total capex expenditure on yarn will increase the spindle capacity at Kharigram and Rishabdev by 2,40,192 and 10,080 spindles respectively.

The company is also firming up other capex plans for Yarn spinning in the current financial year and plans to add another 75,000 spindles in the coming years. Meanwhile, RSWM registered a 20.4 per cent increase in net revenues to Rs 239.3 crore in the first quarter ending June, 30 2006, as against Rs 198.8 crore last year.

The yarn business significantly grew by 25 per cent to Rs 224.8 crore for the quarter, while the fabrics&garment business stood at Rs 22.3 crore.

Exports revenues saw a substantial increase of 51 per cent to Rs 111.6 crore for the periods. The total exports for the company stood at Rs 451 crore in the last financial year, which was 46 per cent of the total revenues this year.

The company is hoping to increase its exports by 27 per cent annually, bringing it to almost 50 per cent of expected revenues in the year 2006-2007.

Meanwhile, the 2 X 23 MW power plants are expected to be fully operational by Q1FY08 and will assist in significant power cost savings for the company. The first phase of plant is expected to be operational in 2007 and will bring down the power cost by 30 per cent.

The company has also finalised the denim project that will be completed over two phases. Phase I at an investment of Rs 85 crore and phase II at an investment of Rs 70 crore.

The company has also decided to set-up a yarn spinning capacity at an investment of Rs 120 croe to support the denim project.

Trial production for stage I of the denim unit is expected to commence in Q1 of FY08.

UNI