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Wednesday, June 21, 2006

Textile cos step back on IPOs

A number of textile companies which were earlier planning big-ticket initial public offers, IPOs, are putting their plans on the backburner, steering clear of the volatile stock market, reports The Economic Times.

Apparel exporter Orient Craft, OCL, which had planned to raise about Rs 300 crore (Rs 3 billion) through an IPO and private equity has deferred its plan, sources said. KS Doshi, vice-president (finance), Texport Garments, said the Rs 300-crore company, which was looking to raise Rs 75 crore (Rs 750 million) to fund the expansion of its manufacturing facilities has also postponed its entry to 2008.

Other big exporters, including Shahi Exports, which had in place a similar roadmap to raise finances, are also shelving it for the moment.

Unless the market stabilises, one cannot expect people to invest. Most companies across sectors have deferred their IPO plans indefinitely, reasons Prithvi Haldea, MD, Prime Database, the New Delhi-based firm that tracks primary markets.

Analysts point out that while textile exporters with bigger turnover are staying away from the market, many small and medium companies are still raising money. Some companies like Abhishek Mills and Minar International are pressing ahead with their action plans.

All they are waiting for is the Sebi nod to raise Rs 50 crore (Rs 500 million) and Rs 85 crore (Rs 850 million) from the market.

As many as 15 companies had announced their intention of turning to the capital market to fund their business activities in 2006 expecting the momentum to be sustained.

Though textile companies are witnessing a lot of activities, the deal sizes are not as large as other industry heavyweights like oil and gas or telecom, sources said. Though market interest in IPOs had generally picked up, a large number of textile IPOs underperformed, they added.

No textile company has raised over Rs 500 crore (Rs 5 billion) from the market. Last year, Gokuldas Exports mopped up about Rs 132 crore (Rs 1.32 billion).

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