Mozaffar Spinning to invest Tk90cr for second phase expansion

Mozaffar Hossain Spinning Mills Limited, a concern of SIM Group, will invest Tk90 crore for a second phase expansion by installing new machines and setting up a captive power plant at its factory premises to produce yarns for import substitution.

It produces export-oriented woven fabrics cotton yarns and supplies them to the garments industry.

Currently, the mill can spin up to 40-count cotton yarn in the range of cotton to blended yarns such as polyester, lycra and others.  

After the company disclosed the information in a stock exchange filing on Sunday, its shares closed 2.16% higher at Tk33.10 on the Dhaka Stock Exchange (DSE). The shares witnessed a 40% jump since January.

The company said it will install 10,200 ring spinning units, which will produce eight tonnes of high-end value-added blended yarn per day.

To ensure an uninterrupted power supply, it will install a gas-based captive power plant with a capacity of 2 megawatts at its factory.

Out of the total investment fund, around Tk70 crore will come from banks and the rest from the company's fund.

In the first phase, Mozaffar Hossain Spinning earlier installed 36,000 ring spinning units in its Narayanganj factory with an investment of around Tk215 crore, which came into operation in January last year.

Haris Alam, company secretary of Mozaffar Hossain Spinning, told The Business Standard, "We expect the new project will go into production in the next one and a half years. It will add 30% to the company's total revenue."

He said the demand for high-value yarns is increasing in the country and most of them are imported from abroad. "So we have emphasised on producing high-value yarns."

"Currently, we are getting a lot of export orders. They will increase in the coming days. So we have to increase our production capacity," he added.

The country's highest earnings of $3.51 billion brought on by apparel shipments posted over 33.8% year-on-year growth in February this year. Of the receipts, $1,795 million came from woven shipments, while knitwear items fetched $1,716 million, according to the Export Promotion Bureau.

Meanwhile, Mozaffar Hossain Spinning has acquired 30% shares in Suntech Energy Limited by investing Tk0.49 lakh.

Now the company wants to sell the stake of Suntech Energy as it is no longer interested in doing business in the alternative power sector.

Haris Alam said it had invested as part of its business diversification. But the board now wants to focus on the core business. So the company is selling its Suntech shares.

Financial performance

Mozaffar Hossain Spinning's business bounced back strongly from the Covid-19 shocks in the first half of fiscal 2021-22.

During the July-December period, its revenue jumped 251% to Tk124.32 crore, from a year earlier.

The profit stood at Tk9.78 crore which was at a loss of Tk3.89 crore a year ago.

Its earnings per share stood at Tk0.97.