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Tuesday, May 30, 2006

Vigneshwara Exports IPO opens on June 7

Vigneshwara Exports, the company in home textile business of made ups for more than a decade, proposes to enter capital market on June 7th, 2006 with a public issue of 47,60,000 equity shares of Rs 10 each through book building process.

The issue closes on June 13th, 2006 and the price band has been fixed at Rs 121 to Rs 140 per equity share of Rs 10 each.

The issue would constitute 46.21% of the total post issue paid up equity capital of the company.

Karvy Investor Services is the BRLM for the issue and Bigshare Services private is the registrar.

Out of the public issue, 3,60,000 equity shares have been reserved for eligible employees leaving the net issue to the public of 44,00, 000 equity shares. The issue is being made through 100% book building process where in up to 50% of the net issue to the public shall be offered on a proportionate basis to qualified institutional buyers.

Five per cent of the portion available for allocation to QIBs shall be allocated proportionately to mutual funds. Further not less than 15% of the net issue to the public shall be available for the allocation on a proportionate basis to Non-institutional bidders and not less than 35% of the net issue to the public shall be available for allocation on a proportionate basis to retail individual bidders, subject to valid. Bids being received at or above the issue price 3,60,000 equity shares would be allotted on a proportionate basis to eligible employees.

Vigneshwara Exports proposes to set up a textile process and weaving house with an estimated investment of around Rs 200 crore (Rs 2 billion). The company has raised Rs 5.40 crore (Rs 54 million) through private placement and proposes to part finance this projects through a term loan of Rs 130.75 crore (Rs 1.30 billion). Part of the funding will be by way of internal accruals and to meet the balance fund requirement, the company proposes to enter the capital market with this public issue.

The company has a competitive edge by way of the lowest anti subsidy duty for its exports to the European Union. While the rest of the exporters in India have been levied with a duty ranging up to 12%, VEL enjoys an advantage till the January 18, 2009 with 4.4% anti subsidy duty on its exports, a significant portion of which are made to the European Union.

Vigneshwara Exports, the largest exporter of bed linen to Europe, launched its wide range of products in the USA during the New York market week. The company so far was concentrating on European markets only, however, in view of the impending vertical integration into weaving, processing and printing operations, the company had decided to introduce its high and medium segment product range into other markets like USA, Russia and Australia.

The growth in the company’s business can be judged from the fact that its total income has jumped from Rs 46.18 crore (Rs 461.8 million) for the year ended March 31st, 2002 to Rs 145.52 crore (Rs 1.45 billion) for the year ended March 31st, 2005 and the net profit during the same period has increased substantially from Rs 34 lakh to Rs 3.58 crore (Rs 35.8 million) respectively. During the first three quarters of the current year ended December 31st, 2005, the company has increased its net profit to Rs 7.75 crore (Rs 77.5 million) on a total income of Rs 115.56 crore (Rs 1.15 billion).


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