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Textile IPO rush sets in Tamil Nadu

Companies in Tamil Nadu's textile belt are opting for IPOs now. Till now they had banked on debt to run their privately held businesses. Integrated firms manufacturing goods across the supply chain from yarn to finished apparel work out of Coimbatore, Tirupur and Erode. They boast of fairly high levels of operating margins, international clients like Walmart and Macy's and strong business continuity typical of family-run businesses. But they have thus far held back their exposure to capital markets. Lack of exposure limited the way they structured their companies -it was either proprietary or limited liability partnership. Some extended it to private limited companies.

A slow-but-promising European recovery, strong domestic demand and a gradual increase in exposure to how the capital markets work appear to have pushed entrepreneurs towards the markets now. Their ways of raising funds have changed.

Globalisation has expanded their horizons to the avenue of tapping public money. In a competitive, volumes-driven business environment, a company needs to have a strong fund flow. At a time of high interest costs, capital markets are seen as a great way to access funds. And clients feel safer buying from a listed company. Over the last decade, only a handful of Tamil Nadu's textile barons have taken to Dalal Street and fared well after their IPO and sustained interest among investors.

Last modified on Thursday, 01 September 2016 06:08

 
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