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Wednesday, May 17, 2006

Major investment to be made in textile sector: Hanung Toys

CMD of Hanung Toys & Textiles, Ashok Kumar Bansal says after the quota abolition, there is a lot of potential in textiles. Therefore the company plans to make a good amount of investment in it, he says.

But he also says that the toys business would not be ignored and the company is planning to increase its capacity in that segment by 25%.

Discussing the IPO that the company is planning, Bansal says the company's requirement is Rs 175 crore.

Excerpts from CNBC - TV18’s exclusive interview with Ashok Kumar Bansal:

Q: You intend to invest in soft toys and home fabrics textiles from the IPO proceeds. What would be the break up?

A: Our major investment will be in the textile sector because after the quota abolition, there is a lot of potential in textiles. But simultaneously, we are also going to expand our toys business. In toys, we are going to increase our capacity by 25%, which will be met through internal sources.

Q: How much land are you looking to acquire? What kind of development plans do you have on that land?

A: We have already acquired 24 acres of land and we are going to put up a weaving plant, processing plant and a made-up unit on it. The total capacity of the weaving plant would be 21,000 meters per day, that of processing would be 1,00,000 meter per day and of the made up unit would be 16,000 sets per day.

Q: When will they become operational?

A: It will go operational within this financial year.

Q; A major chunk of your revenues come from export market. Are you looking at diversifying your client base?

A; We are not depended on one buyer. We have more than 40 buyers and all our export turnover is scattered there. Right now, our domestic market is 10% and we want to focus more on the domestic market as more and more organized retail selling is coming up. We have already tied up with most of the new comers and our intention is to increase the domestic turnover to 25% of our total turnover.

Q: Will textiles be the key driver for you in FY07 and the years ahead?

A: Both out businesses will drive the company's growth because we are going to increase our turnover from the toys business too. In toys, as skilled labour is required, which India does not have much, we will be increasing the turnover by 25% only. In case of textile, huge quantum of machinery and labour is there. We are increasing our turnover very rapidly in the textile segment.

Q: How much money do you intend to raise through the IPO and what is your total requirement because you intend to go in a mix of debt as well as equity?

A: Our total requirement is Rs 175 crore. We have already tied up with various bankers for debt. It depends on how much we are able to raise from the market and accordingly we will utilize that portion.

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