http://www.thefinancialexpress-bd.com/2009/06/01/68402.html
Textile yarn producers overcome difficulties, plan major expansion
Kayes M Sohel
The country’s textile yarn manufacturers have come out unscathed from one of the worst crisis in the industry’s history and have now unveiled a slew of new plants, pinning hopes on apparel sector’s further expansion.
Two months back the spinning industry — numbering around 300 plants and producing nine million tonnes of yarn a year — were counting losses every day, as cheap Indian yarn invaded Bangladesh, pushing local yarn to pile up in factory go-downs.
A stagnant export growth of apparel items due to the impact of global recession coupled with strong Taka have also made their products at least 20 per cent costlier than their Indian counterparts.
But in the past six weeks, local yarn spinners have pulled off one of the strongest comeback that the country’s industry has ever seen, thanks largely to the government’s restrictions on yarn import through Benapole port.
“We are now close to a happy ending of what was initially a very difficult year for the country’s yarn spinners,” said Masudur Rahman, executive director, Delta Spinners Ltd, one of the country’s leading listed spinning manufacturer.
Rahman said cheap cotton prices in the international market had also helped, as they sought to ramp up production to recoup the losses they incurred between October and March this fiscal year.
“Almost every manufacturer I talked to are expecting a rise in profits and annual turnover. Many are trying to expand production to bring down overhead cost and be as competitive as their Indian counterparts,” he said.
Delta Spinners has recently announced that it would modernize, renovate and expand its existing spinning units.
The company also plans to raise Tk 452 million from the stock markets to set up a new knitting unit by making fresh initial public offering (IPO) and issuing rights shares.
Another listed textile company Metro Spinning, a sister concern of Maksons Group, also plans to set up an export-oriented composite textile unit, a forward linkage for the yarn maker.
“We are setting up a composite textile plant to make sure that we don’t face the same troubles in future that we faced in the past few months,” said Mohd Mohsin Adnan, executive director and company secretary of Metro Spinning.
The company struggled to sell its yarn to local garment makers early this year and saw its ware-house building up a big inventory.
The sour experience has forced the company to go into composite knitting plant so that it can consume its own yarn.
The unit is expected to start commercial operations by September 2010. It will produce 8.7 million yard finished fabric from yarn.
Adnan said Bangladesh apparel exports would bounce back fast from an indifferent 2008-9 fiscal year, as its major competitors including China are already losing out due to higher labour cost.
“Bangladesh exports will be the first to make gains as soon as the world textile market bottoms out. We have readied plans to make better use of the forthcoming opportunities,” Adnan.
The Metro Spinning is projected to make a net profit of Tk 108 million in the first year, Tk 121 million in the second, Tk 135 million in the third and Tk 149 million in the fourth from the expanded unit.
It will raise Tk 310 million from the stock market by issuing rights shares to set up the new unit in Rupganj, Narayanganj. But it needs approval of the Securities and Exchange Commission.
Manufacturers said Malek Spinning Mills Limited, Square Textiles, Noman Group, Bulbul Textile and ACS Textile had also unveiled plans to install production units.
Masud Advani, chairman of ACS Textile, said China’s gradual withdrawal from the low-cost garment items has made Bangladesh the chosen destination for buyers of such products.
“Low-end products are getting expensive in China due to financial recession. So, buyers are now casting their eyes on the South Asian countries, particularly Bangladesh,” he said.
ACS Textile is diversifying into home textile such as bedsheets and towels, as the country’s existing plants are already doing much better than India, Sri-Lanka and Pakistan.
