IPO-Bound Sanathan Textiles' Yarn Manufacturing Capacity To More Than Double By FY27

Sanathan Textiles Ltd. aims to more than double its yarn production capacity to close to 5 lakh tonnes per annum by financial year 2027 from the current 2.23 lakh tonnes per year.

The yarn manufacturer is gearing up for its initial public offering, with proceeds set to bolster its growth and debt reduction strategy.

The Rs 550-crore IPO comprises both an offer-for-sale component, as well as a fresh issue of shares. The company will offload shares worth Rs 150 crore through the offer for sale and will issue fresh shares worth Rs 400 crore. The maiden issue will launch its initial public offering on Dec. 19 at a price band of Rs 305-321 per share.

“We are in the business of manufacturing yarns and are the only company in the country to have three verticals of yarns—polyester, cotton, and technical textiles—at one location,” Paresh Dattani, chairman and managing director told NDTV Profit in an interview.

The company proposes to use the proceeds of the issue towards repayment of borrowings and general corporate purposes, as well as investment in the subsidiary, namely Sanathan Polycot Pvt.

Currently, the company manufactures 2.23 lakh tonnes per annum across three verticals—2 lakh tonnes of polyester yarn, 14,000 tonnes of cotton yarn, and 9,000 tonnes of technical textiles, said Sammir Dattani, executive director at Sanathan Textiles.

Dattani expects that cumulative yarn manufacturing capacity will grow to nearly 5 lakh tonnes per annum by FY27, up from the current 2.23 lakh tonnes.

The company's new facility in Punjab, set to commence operations in 2025, will play a pivotal role in the expansion. “In Phase 1, we will manufacture 2.5 lakh tonnes of polyester film yarn annually. This will more than double our polyester capacity,” he added. The facility's construction is in its final stages, with commissioning expected in the first quarter of the next fiscal, Dattani said.

DAM Capital Advisors Ltd. and ICICI Securities Ltd. are the book-running lead managers for the IPO, whereas KFin Technologies Ltd. is the registrar for the issue.