Published on Friday, February 15, 2019 by Chittorgarh.com Team
Bhilwara (Rajasthan) based Lagnam Spintex Ltd. (LSL) came with its maiden IPO of ₹24.60 crore in September 2018. The issue was oversubscribed by nearly 5 times. It raised this fund for its capex plans of ₹125.40 crore to diversify into Ring Spinning cotton yarn manufacturing at the adjacent plot. Said project funding was planned with internal accruals and IPO funding of approx. ₹31.40 crore and the balance i.e. ₹94 crore as bank loans at a net of concessional rate of 3.5% p.a.
While as per offer documents, LSL indicated that it will start its erection of plant & machinery from March 2019; in fact, it has already started erection of plant & machinery from mid-December 2018. It has already spent part of internal accrual and IPO funding in this project and has also utilized around ₹60 crore from the bank loans. It is utilizing the bank loan as and when it makes new machinery purchases.
Today it is ahead by almost two and a half month on its expansion plans and is confident of starting trial runs as well as commercial production much before the schedules. Currently, around 550 persons are working on this expansion project that includes new workmen/technical staff (over 100) who are being trained along with installation as well as the production process.
For this new plant, it has opted for most modern and latest automated machinery and has also plugged the loopholes on the waste management system.
Despite odds, the company is confident of maintaining its bottom line from the existing operation at the last year's level with higher exports to European countries. Based on current evaluations, management is confident of starting commercial production on new plant by mid-July 2019. With the help of this plant's contribution, LSL is likely to post two and half time increase in its top line that currently expected around ₹85 crores. The commensurate rise in the bottom line will also be in place as the new plant will have higher margin products.
Considering Project Expansion is going ahead of schedule, company looks very attractive at current price of ₹16-20.
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