Sintex Industries to invest Rs.410 Crores on expansion plans

Sintex Industries Ltd has announced that the Company has chalked out an ambitious Rs 4100 million expansion plan to be invested in the four years commencing with the current fiscal. Under the expansion plan, Rs 1800 million is to be invested in textiles and Rs 2300 million in plastics division.

Textile Expansion:

The Textile division currently which has an annual capacity of 21 million meters is to be expanded to 24 million meters by FY08 at a cost of Rs 700 million in Phase I. In Phase II this capacity will be enhanced by an additional 5 million meters to stand at 29 million meters by 2008-09. The second phase will be completed at a cost of Rs 800 million. The expansion comes at a time when the company is planning a foray into high end women’s shirting globally. The company is also setting up a new garmenting facility to be commissioned by September, 2007 at a cost of Rs 350 million.

Highlighting the growth strategy and expansion in textiles, Amit Patel, Managing Director, of the Company, said "We have a significant presence in men’s shirting in high end structured fabrics globally through our JV’s in Italy and the recent one in UK. Our expansion from 21 to 24 million meters is aimed at enabling Sintex to enter the high end women’s shirting’s which enjoys considerable potential both globally and domestically. The expansion to 29 million meters by 2009 is targeted at high value jacquard products and the upholstery segment over the longer term."

Expansion in Plastics:

The Plastics division is witnessing rapid growth in the last few years. From Rs 2460 million in FY2002, the sales have crossed Rs 6000 million FY2006. Currently the Plastics division comprises three categories namely - Pre-fabricated structures, Custom moulding and Tanks. The company plans to invest Rs 1100 million towards expanding its pre-fabricated structures capacity and Rs 700 million towards increasing its electrical accessory manufacturing capacity which is part of the custom moulding business. The remaining Rs 500 million will be routine capital expenditure.

The Company´s electrical accessory manufacturing operations are presently running at 100% capacity. This expansion will result in the addition of 12000 MT by December 2007 at a cost of Rs 700 million. These accessories find application in high and medium voltage transmission lines set up both by SEBs and private power manufacturers. The Company believes that the quadrupling of its capacity in this segment will enable it to optimally cater to the strong growth anticipated as a result of the large investments in power sector.

The pre-fabricated structures division of plastics is also being expanded geographically. The company is investing Rs 1100 million to set up plants in Nagpur and Kolkatta, at an estimated cost of Rs 550 million each. The Nagpur facility is expected to be commissioned by November 2006 and Kolkatta by September 2007. Post these expansions, the Company will be present in 8 locations enabling the Company to cater to the requirements of 24 states which make up 70% of India’s geography. Moreover, it will enable the business to minimize transportation costs which form a significant part of the total expenditure of the business and also reduce turnaround time. Pre fabricated structures comprise amongst others housing, classrooms, healthcare and sanitation facilities, shelters for the Indian Army and for disaster relief, B T Shelters for the telecom industry, etc.

"Our plastics business is on a robust growth path, the gradual expansion of our product portfolio and geographical reach will enhance opportunities both in Pre-fabs and in custom mouldings. Our expansion in textiles and plastic is a reflection of our long term growth strategy with strong growth potential." added Mr Patel.

Further the Company has informed that, Funding of expansion for Plastics to be done through internal accruals. Textile division´s expansion to be funded through borrowing under Textile Upgradation Fund (TUFS) scheme.

Source : Equity Bulls

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