Spentex Industries Scouts For Foreign Partner

The move to get a strategic alliance is to ensure that a substantial part of the Spentex Industries output of cotton yarn has an assured buyer as well a market. "We have already started negotiating with some potential overseas partners who could buy 25 per cent equity stake in Spentex," O N Daga, managing director, Spentex Industries, said. Since the RPG group does not intent to part away with the management control in the company, hence it will not offer anything beyond 25 per cent equity stake to the foreign partner.

Spentex Industries has tied up for import of cotton that will meet a substantial part of its requirements and ensure that it is not exposed to the vagaries of domestic price fluctuation. According to Daga, the landed cost of imported cotton will bring in large savings for the company as its cheaper by around 15 per cent as compared to the domestic prices of cotton.

 

In the current year, the company plans to consolidate the expansion it had undertaken last year and give more thrust to exports for which the company hopes to finalise by its foreign partner by December-end.

Last year, the company added 7,000 new spindles bringing the total to 29,000 spindles at its Baramati plant, near Pune. In order to reduce its high cost debt, the company plans to reshuffle its debt portfolio. Currently, its debt is at a cost of 14.5 per cent. It plans to issue Rs 5 crore non-convertible debentures to partially substitute the high cost debt. The company's total debt is Rs 25 crore.

With the restructuring of its debt and the on-going cost cutting exercise, Spentex Industries hopes to come out of the red in the current year. "For the current year we have targeted to double the cash profit from the present level of Rs 2.29 crore to Rs 5 crore and achieve Rs 1.50 crore net profit from a net loss of Rs 1.58 crore last year. The turnover target is set at Rs 61 crore from Rs 58 crore achieved last year," Sharad Kulkarni, non-executive director, Spentex Industries, said.

Meanwhile, Spentex Industries net sales dropped by 2.02 per cent to Rs 14.97 crore (Rs 15.28 crore) for the first quarter ended June 2000, while its net profit stood at Rs 10 lakh from a net profit of Rs 3 lakh posted last year.