RSWM to make Rs 11.5 cr open offer for further 20% in Cheslind

New Delhi, Mar 19 (UNI) Textiles firm RSWM Ltd will make an open offer to acquire another 20 per cent equiyt in Cheslind Textiles Ltd at Rs 25 per share, aggregating to Rs 11.5 crore.

RSWM Ltd today completed the acquisition of 48.17 per cent equity stake in Cheslind Textiles Ltd, a 100 per cent EOU manufacturing cotton yarn in Bangalore, for Rs 27.8 crore.

Post the open offer, the company's share in Cheslind Textiles will rise to 68.17 per cent.

The company had earlier said it would rapidly scale its yarn operations keeping in view the anticipated buoyancy in the textile sector.

After the acquisition, the company's total spindlage will increase to about 3,60,000 spindles.

It believes that it will be able to generate good returns on its investment in Cheslind Textiles keeping in view that the acquisition cost per spindle is Rs 15,500 compared with Rs 25,000 per spindle that will be required if such a plant is established on a green-field basis.

Also, it plans to better manage productivity and efficiency levels of Cheslind Textiles, and deliver integration related benefits from the acquired operations.

The company proposes to fund this acquisition through internal accruals.

Cheslind Textiles has a 64,512 spindle operation based out of Bangalore. For 9MFY2007, it reported revenues of Rs 94.33 croore and EBIDTA of Rs 14.91 crore.

ICICI securities are the advisors to RSWM for this transaction.

''We are delighted to have concluded the transaction at an attractive investment level and it will augment our size, product mix and geographical presence. This acquisition helps us increase our capacities at an accelerated pace. Our cash-flows from continuing operations remain firm and will be even stronger once our thermal power plant goes on stream in the next quarter.'' RSWM Ltd Joint Managing Director Riju Jhunjhunwala said.

''Our debt requirements for already announced capex plans have been tied up and we have comfortable headroom on our balance sheet to fund this acquisition out of internal accruals,''he added .

UNI