With a line of IPOs hitting the market from the promising sectors like power and realty, an IPO from the troubled textile industry may look too ambitious. However, the rationale behind Jindal Cotex, a Ludhiana-based conventional textile company's IPO is its foray into value-added technical textile space. The valuation of the issue looks too expensive considering its financial performance in the last three years. Excluding the promoter's contribution and reservation for employees of the company in the offer of 1.245 crore shares, the net issue available to the public is 1.075 crore shares. The net issue would contribute 43% of the post issue paid up capital of the company. The proceeds from the issue would be mainly used for setting up two wholly-owned subsidiaries-Jindal Medicot (JML) and Jindal Specialty Textile (JSTL). A part of the proceeds will also be used to expand the current capacity of yarn manufacturing and to add new capacities for yarn dyeing and production of garments. Company: Incorporated in 1998, Jindal Cotex is engaged in manufacturing of polyester, acrylic and blended yarns like polyester viscose, polyester cotton, combed and cotton yarns. Beginning production with 6,900 spindles, the company gradually raised its capacity to nearly 23,500 in 2006. Jindal Cotex also earns a part of its revenues through trade of knitted and woven products. Exports account for nearly 10% of its revenue from the yarn business and 25% of the trading business. Expansion Plans: The company is planning to extend its yarn capacity through a new unit by setting up 50,400 spindles in two phases. The second phase of this project will include installing a yarn dyeing capacity of 6 TPD (tonnes per day) and a garment manufacturing unit with a capacity of 3,000 pcs per day. The company plans to venture into the value-added technical textile space through its two subsidiaries and the production units will be set up in Himachal Pradesh. JML plans to produce a variety of medical textile products like bleached cotton wool and cotton crape bandages which are used in healthcare and cosmetic industries. The second subsidiary JSTL plans to manufacture PVC (poly vinyl chloride) laminated fabrics used in banners, tents, truck-siders, tarpaulin fabric and inflatable boats.