Indo Rama Ties Up With German Banks For Rs 280-cr Loan

Mumbai, January 19: | Updated: Jan 20 2003, 05:30am hrs
Indo Rama Synthetics Ltd has tied up with German banks -- IKB and DEG -- for a loan of Rs 280 crore for funding its proposed Rs 500 crore expansion of its polyester staple fibre (PSF) production capacity at its Butibori plant near Nagpur in Maharashtra. The balance amount will be raised through internal accruals.

In addition, the company has also embarked on a mini expansion plan for its value added products like the partially-oriented yarn (POY) and the fully drawn yarn (FDY).

The mini expansion of Rs 48 crore is expected to be fully operational from March 2003. This has been funded by DEG Euro loan of Rs 26 crore, SBI Yen loan of Rs 17 crore and the remaining Rs 35 crore from internal accruals.

At present, the company has two manufacturing plants, one at Butibori and the other at Pithampur near Indore in Madhya Pradesh, with a combined manuafacturing capacity of 3,00,000 tonne per annum (tpa).

Post-expansion, the capacity is expected to be around 5,00,000 tpa by early 2004.

The expansion is being executed in partnership with Zimmer AG, of Germany.

In an exclusive interview with FE, Indo Rama managing director Om Prakash Lohia said, "In India, there is a huge potential for growth in the polyester industry.

The future demand in polyester is expected to grow by around 8-10 per cent in the next two years provided the rationalisation of the duty structure takes place.

Thus, to capitalise on the growing opportunities in the evolving market, Indo Rama has embarked on this brown-field expansion plan with a special focus on value added products."

Meanwhile, the company has also undertaken a corporate restructuring through the demerger of its spinning operations into a separate company.

Said Mr Lohia, "This will help the company to add value through focussed attention to the separate business dynamics of both polyesters and spinning."

At present, the company exports its products to more than sixty countries around the world including Europe and Africa.

The company is also in the process of exploring new markets in Latin America, Argentina, Columbia and Venezuela