Precot Mills to finalise share swap ratio on March 15

Precot Mills would finalise the share swap ratio for the proposed merger of Meridian Industries Ltd with itself and to approve the scheme of amalgamation on March 15, 2006.

A senior official of Precot Mills said that with the merger of Meridian Industries with Precot Mills, the synergies would be reflected in one strong entity with a turnover of close to Rs 350 crore and an employee base of over 4,300 employees. Currently, Precot Mills has an employee base of 3,500 workers and a turnover of Rs 260 crore.

The company would absorb all the 800 employees working for Meridien Industries, said a senior official from Precot Mills. The official pointed out that since 70 per cent of the shares of Meridien Industries are also the shareholders of Precot Mills, the merger would be a smooth one.

Meridien Industries, an unlisted company, was set up in 1993, was supposed to be listed in the Madras or Coimbatore stock exchanges later. But the regional stock exchanges started losing favour and the minimum paid up capital was increased to Rs 10 crore for companies to be listed in Bombay stock exchange and National Stock Exchange. Moreover, after the fallout of plans of the Meridien Industries to enter into joint venture with an overseas partner, the board of directors of Precot Mills decided that merger of Meridien Industries was a better option.

Currently, Precot Mills has 1.26 lakh spindles, 88 looms and 1,344 rotors. With the merger, the company's capacity would be expanded to 1.50 lakh spindles and additions on the routers front would take the total rotors to 1,536.

Precot Mills has chalked out expansion plans as well. It expects its garment unit to start production by September 2006.

This garment unit would com eclose to its fabric unit. The unit would be set up in two phases. In the first phase the company would be set up 400 stitching machines capable of making two million pieces annually. The second phase would see expansion with an additional 400 machines to take the capacity to four million pieces.

The company also plans to invest Rs 39.8 crore to increase the spinning capacity and modernising the current spindles. The investment would be done over a three-year period. Precot Mills spindlage would be increased by 13,846 spindles. The company would be investing around Rs 20.3 crore for adding somet looms to its existing set of 88 rapier looms. The waeving capacity currently at 5.3 million metres per annum and post expansion would increase by 48 per cent to 7.5 million metres per annum.