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IDBI casts net for buyer to bail out Orient Syntex's yarn unit
Sabarinath M
MUMBAI, January 13: The Industrial Development Bank of India (IDBI) is scouting for a buyer for Orient Syntex's synthetic blended yarn plant at Yavatmal, Maharashtra, following a directive from the Board for Industrial Finance & Reconstruction (BIFR). The company, manufacturing synthetic blended yarns, came under the BIFR net in August 1997.IDBI, in its capacity as the operating agency, has invited bids for the rehabilitation of the company by way of takeovers, amalgamations and change in the management. The company ran into trouble when the expansion of its spindleage capacity came unstuck following the non-availability of funds and depressed market conditions. Lack of demand, especially from the European market, also acted as a major deterrent. The company was planning to add 8,640 spindles to its total capacity of 21,000 spindles. It went public in December 93 to part finance the expansion programme. Shortage of working capital has been a major cause of worry for the last few years and the
management is working on a proposal to tide over the crisis, company sources said. Earlier, the company was planning to set up a worsted spinning unit, for the manufacture of yarns used to make socks, and an 100 per cent cotton towelling export oriented unit. It owns a modern fibre-dyeing plant, which can make slub yarn and fancy yarn of 12-40 single and two ply counts. The company slipped into the red in 1995-96 when it reported a net loss, which rose to Rs 15 crore in 1996-97. While the promoters hold 41.93 per cent of the total equity, 12.48 per cent is with the public. A strong management with sound financial strength and technical competence can only engineer a turnaround, analysts said. The absence of sound marketing techniques and innovative products are hampering the prospects of smaller players in the synthetic blended yarn segment, they added. However, the cotton blended yarn segment showed improved performance in the first half of 1997-97 , with net sales showing an increase. The production of
man-made fibre declined during the financial year 1996-97, except polyester , which showed a healthy trend. While PFY production increased by 27 per cent, PSF production increased by nearly 30 per cent. The country produced 4.79 lakh tonnes of PFY during 1996-97 as compared to 3.76 lakh tonnes in the previous year. Acrylic staple fibre production also increased by 11 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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