Rajasthan Spg buys Jaipur Polyspin

Rajasthan Spinning and Weaving Mills, a part of the Rs 1,700 crore LNJ Bhilwara group, today announced an acquisition of 59.6 per cent stake in Jaipur Polyspin, a synthetic yarn manufacturer, for a consideration of Rs 10.7 crore.

Rajasthan Spinning will also pay Rs 2.53 crore to the promoters of Jaipur Polyspin as non-compete fee.

The company will also make an open offer for another 20 per cent equity stake in Jaipur Polyspin subject to the Security and Exchange Board of India approval.

Rajasthan Spinning is planning to invest an additional Rs 13 crore towards modernisation of the acquired operations.

"The acquisition will help us in further enhancing our group's operating capacity and our revenue generation. The opportunities in the textiles sector remain attractive and such an initiative will help us achieve rapid growth. The cost structure of Jaipur Polyspin can be revised to post a better financial performance," said Riju Jhunjhunwala, joint managing director, Rajasthan Spinning.

Post acquisition, Jaipur Spinning will become a 80 per cent held subsidiary of Rajasthan Spinning, and in the long term the LHJ Bhilwara firm plans to completely integrate the operations Jaipur Polyspin into itself.

During the last financial year Jaipur Polyspin posted a turnover of Rs 71.5 crore and a net profit of Rs 3 crore. The company has been making profits since the last ten 10 years and has a blended yarn manufacturing facility at Ringas in Rajasthan which has an annual capacity of 27,900 spindles.

The acquisition is expected to lower the cost of raw material procurement for Rajasthan Spinning, besides the savings on marketing and sales expenses.

It now has five manufacturing facilities in Rajasthan and the company is planning to increase its turnover to Rs 900 crore by the end of 2006 from its current sales of Rs 700 crore.