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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, 2007. 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, 2007 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, 2007. 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, 2007, 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, 2006 and 2007,
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, 2006
and 2007 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 2006 and
November 2006 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 2008, 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 2007 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, 2007, 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, 2007, 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. R Rangaraj
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