Filatex India stock is in focus after its board approved a preferential issue to the promoters, while cancelling its earlier proposal to raise funds. To discuss the outlook, company’s cash flow situation and its capex plans, CNBC-TV18 spoke with Madhu Sudhan Bhageria, CMD, Filatex India.

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On cancelling fund raising of Rs 250 crore, Bhageria said, “The company’s cash flows have improved considerably now and whatever capex, we would be taking up in the next two years, we would have enough cash flows from internal accruals to take care of that.”

He further mentioned, “This year, we will have more than Rs 300 crore of cash flows and next year, we should have around close to Rs 400 crores and our capex is not more than Rs 500-600 crores in the next two years.”

The promoters of the company are putting in about Rs 27 crore approximately. Bhageria said, “Putting Rs 27 crores is basically because there was a stipulation by the banks in 2017. When we are done, this capex would bring in an equity of Rs 31.75 crore and we had got it in the form of unsecured loans at that time. A part of it, we got through employee stock ownership plan (ESOPs) and the balance, we are bringing in now to fulfil that condition.”

A third of the company’s equity was pledged and a handful of promoters had sold about two lakh shares in the open market in May, which created a buzz among investors. Bhageria clarified, "The shares sold were basically by the employees who had got the ESOPs. So, they have sold the shares, however, as a promoter group, no shares have been sold. And the pledge, they had given as a collateral to the banks, they are hopeful that by the end of this quarter, all their pledges would be released.”

He further specified that their lead bank has already given the letter to release the pledge and the other banks are taking it up in a month or so. “We had not borrowed against it and this was a collateral given for taking term loans. Now that the company's equity and debt ratios have improved, the banks have agreed to release these pledges,” he explained.

For the full interview, watch the accompanying video

(Edited by : Dipika Ghosh)