KPR Mill to expand garment facility at Arasur Business
Chennai Online, India
KPR Mill Ltd proposes to utilise the net proceeds of its IPO to fund plans for expansion of the existing garment facility at Arasur, near Coimbatore; setting up a design studio at Arasur; construction of an additional hostel facility at Arasur; expansion of the processing facility at State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT), Perundurai;
investment in a new knitting facility at Arasur; addition of balancing equipment for existing spinning facility at Sathyamangalam and general corporate purposes.
The IPO opens August 2, 2014. Price band has been fixed at Rs 225 to Rs 265.
KPR Mill Ltd, a vertically integrated apparel company with operations located at Coimbatore, Sathyamangalam and Tirupur, in Tamil Nadu, has entered the capital markets on August 2, 2014 with a public issue of 5,912,100 equity shares of Rs 10 each through a 100 per cent book-building process.The price band has been fixed at Rs 225 to Rs 265 per equity share of Rs 10 each and the issue closes on August 7, 2014. The issue would constitute 15.69 per cent of the fully diluted post issue paid-up capital of the company.
During the year ended March 31, 2014, the company exported 99.86 per cent of its readymade knitted apparel directly to international clients, including among others, Carrefour, Penneys (Primark), Pom-tex, C&A, Ethel Austin, Kiabi, Bandos AG, Mother Care, Innovations Club, and Grouppo Industry Moda SPA, and it has more than 1,000 regular domestic clients for yarn and fabric.
The company produced 10.16 million and 11.55 million pieces of readymade knitted apparel during the year ended March 31, 2014 and 2014, respectively. It has a cumulative capacity of 128,064 spindles in four mills, and it manufactured approximately 26,232 and 28,346 metric tons of yarn during the year ended March 31, 2014 and 2014 respectively, which represented capacity utilisation of approximately 98 per cent and 98.2 per cent during such periods. It produced 6,147 and 6,734 metric tons of fabric during the same period respectively, which represented capacity utilisation of approximately 90 per cent and 80 per cent during such periods.
In August 2005, it commenced construction of a new manufacturing facility at Arasur, in order to expand the capacity and bring apparel manufacturing and upstream spinning and knitting operations in one campus of approximately 44 acres.
In September 2014 and November 2014 respectively, the company began the gradual implementation of apparel manufacturing and spinning at this new facility. It expects the Arasur facility to be fully operational by the end of fiscal 2014, which will enable it to significantly expand its apparel manufacturing business with an initial capacity of 25.90 million pieces per year. The printing and embroidery machines at the Arasur facility have been made fully operational in March 2014 which will enable it to meet most of its printing and embroidery requirements in-house.
The Arasur facility will also expand its upstream spinning and knitting operations by increasing spinning capacity to 212,064 spindles and providing it with a cumulative manufacturing capacity of approximately 54,000 metric tons of yarn and 17,200 metric tons of fabric across all of its facilities.
In order to provide end-to-end apparel manufacturing services as is required by multinational value retailers, KPR is constructing a new fabric processing facility at SIPCOT, Perundurai, which will give it the ability to handle all of its processing requirements, including dyeing, bleaching and compacting.
The processing facility is expected to be fully operational as scheduled with capacity to process 23 metric tons of fabric per day. In December 2005, it also implemented a project at Sathyamangalam mill to modernise its spinning operations at that location.
In order to become more self-sufficient, support its expanding operations and reduce reliance on the state electrical grid, which could subject it to increase in cost, the company has installed windmill facilities in Tirunelveli, Tenkasi and Coimbatore districts.
Through these facilities, it has the capacity to produce 39.07 mega watts of power, which, as of April 30, 2014, met all of its energy needs, and which is expected to support approximately 75.0 per cent of its energy needs once the Arasur mill is fully operational. This power supply, together with related tax incentives, enables it to substantially improve profitability. For the year ended March 31, 2014, its power cost per unit was Rs 0.53, which was approximately 84.9 per cent lower than the per unit cost charged by the Tamil Nadu Electricity Board.
