Govindaraja Mills to invest $45m in US

COIMBATORE: Lower power and interest costs and easy availability of quality cotton has pushed Shri Govindaraja Mills to the unlikeliest of investment destinations in the world-the United States (US). The Aruppukottai-based company, part of Jayavilas Group, is investing $45 million (Rs 300 crore) in an open-end spinning unit in North Carolina, US.
"The discovery of shale gas has brought down energy costs in US," says Ramkumar Varadaraj, executive director, Govindaraja Mills.Power costs just 4.5 cents-5 cents per unit (around Rs. 3). Power, which accounts for 15% of the overall costs in India, constitutes just 5% of the total costs in US for the company.
Govindaraja Mills, which has an installed capacity of over one million spindles based mostly in Aruppukottai and Pulivendula in Andhra Pradesh, has tied up with a consortium of India-based banks to raise $30 million for the US unit, which would start production by December. It chose North Carolina over other locations including those in India due to the cost advantages.