Suryajyoti Spinning inaugurates new plant at Rajapur

Suryajyoti Spinning Mills Ltd has announced the inauguration of its spinning plant at Rajapur, Mahubabnagar District, Andhra Pradesh. The plant is equipped with 25,200 spindles geared towards the production of higher (50s to 100s) counts of cotton yarn.

The expansion at Rajapur was funded at an investment of Rs 48 crore, financed mostly by debt (Rs 35 Crore) under the TUF scheme and by internal accruals (Rs 13 crore). Post expansion the Company's overall capacity has increased from 62,560 spindles to 87,760 spindles. The Company is now well-positioned to meet increasing demand with its output being well distributed between synthetic yarn, medium / coarse cotton yarn and finer counts of cotton yarn.

Given the nature of the expansion program, and the Company's ability to finance it through low cost of borrowing under TUF, the expanded capacity is expected to have a very attractive payback period, and improve margins / returns on an overall basis.

As a result of increasing capacity, the Company expects its aggregate revenues to increase to more than Rs 250 crore by FY08 from Rs 140 crore reported in FY06.

Moreover, with better margin products and lower power costs, operating margins are expected to increase to 17-19% from current levels of 12% in FY06.

Further expansion initiative:

In its next phase of expansion, as announced earlier, the Company is setting-up a bottom-weight fabrics weaving, dyeing, and finishing plant in technical collaboration with an Italian company. The Italian company has more than three decades of experience in this industry and has been supplying to major high-fashion labels Like Dolce & Gabbana, Armani, Versace, Diesel, and Reply among others. Production is expected to start in the second half of FY 2008 and the project is likely to be profitable from Day 1.

Source : Equity Bulls

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