Anna Peter

Mumbai , Feb. 18

ESKAY K`n'it plans to invest Rs 316 crore to expand its spinning and fabric capacities.

The company, which is into spinning, processing, knitting and garments, is raising its spindlage to 75,000 (from 50,000) and fabric capacity to 11,000 tonnes per annum at its unit in Bhilad, Maharashtra.

The company has taken term loans aggregating Rs 210 crore to fund the expansion. The promoters would pump in the remaining Rs 106 crore. As of March 31, 2004, the company had a cash surplus of Rs 373.80 crore.

According to the company's Chairman, Mr Navin Kumar Tayal, its fortunes began plummeting after 9/11, with the cancellation of a number of ready orders.

Thus, from Rs 853 crore for the year ended 2001, sales almost halved to Rs 461.87 crore in 2002, and to Rs 398 crore in 2003. The company posted a net loss of Rs 148 crore in 2002. However, taking advantage of Government incentives — for instance, the 5 per cent rebate offered under TUF to processing units — the company managed to reduce its losss to Rs 5 crore in 2004. For the quarter ended December 31, 2004, the company posted a profit of Rs 6.63 crore.

The company has placed orders for the machinery to expand capacities. It is also gradually moving its product mix in favour of fine yarns from coarse yarns earlier.

While the company is targeting both the domestic and export markets, Mr Tayal said the local market offered better price realisations and Eskay K`n'it would try to maintain a judicious mix of domestic and export orders.

The company sees good scope in the local market as a number of global players are looking at India as a hub for outsourcing their fabric and garment needs. Indian companies would also score over companies in neighbouring countries such as Pakistan because of the political stability in India. Some of the countries that Eskay K`n'it exports to are Egypt, Taiwan, Lebanon, South Korea, the Philippines and Hong Kong.

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