Spentex pays Rs 128 cr for 49% in Indo Rama Tex

Deal valued at Rs 84.15 per share.

Spentex Industries Ltd is taking control of Indo Rama Textiles by buying 49.03 per cent from the Lohia family at Rs. 84.15 per share for about Rs 128 crore.

Spentex already owns 14.99 per cent of the company's equity. The acquisition of the shares from the Lohias will take Spentex's stake in the company to 64.02 per cent.

Subsequently, as required by regulation, Spentex proposes to make an open offer for up to 20 per cent at the same rate that it bought from the Lohias.

"Yes, they want to acquire. We have no problem. This is a friendly arrangement. We have to create value for shareholders," Indo Rama Chairman OP Lohia told Business Standard.

He said Indo Rama's priority was its polyester business. Indo Rama Synthetics is the second largest polyester manufacturer in India.

Lohia did not say what he would do with the money. "Money always goes somewhere. We have not done it because of a requirement of money. It makes business sense," he said, and added that the textile business, though profitable, was not growing the way he wanted it to.

Three years ago, Indo Rama Textiles had been spun off into a separate company.

ICICI Securities is the financial adviser to Spentex, while Ernst & Young is advising Indo Rama. Indo Rama Textiles is into spinning of synthetic blended yarn.

The company has two plants, one in Pithampur (near Indore) and another in Butibori (near Nagpur). The two plants produce close to 40,000 million tonnes of yarns in blends (polyester/cotton, polyester/viscose, 100 per cent polyester and 100 per cent Viscose).

The company clocked an earning before interest tax depreciation and amortisation of about Rs 40 crore on a turnover of Rs 392 crore in 2004-05.

"The acquisition puts Spentex among the top three yarn manufacturing companies in the country," said Spentex Managing Director Mukund Choudhary in a statement.