Evince Textiles to buy machinery worth Tk16cr

Evince Textiles Limited is going to purchase capital machinery worth around Tk16 crore to enhance its existing production capacity in hopes of producing premium quality fabrics.

The company decided this in a board meeting on 24 December

At present, the company is using only half of its production capacity. 

Companies are struggling to import capital machinery because of the foreign currency crisis. 

According to company sources, Evince Textiles has its own foreign currency account through which it can make any Letter of Credit (LC) payment. 

In that case, a part of its own funds will be invested to buy machinery, and the rest will be financed through bank loans.

As per its annual report for FY22, the company is utilising 56.59% capacity in its dyeing unit, 61.73% in weaving, and 34.14% in finishing unit.

And, the recent gas and electricity crisis has further dwindled the company's production capacity, said company sources.

At the end of September this year, total loans of the company stood at Tk258.39 crore, which was 114% of its total equity and represents 48% of total assets.

Meanwhile, during the first quarter of FY23, it incurred a loss despite its revenue growing over 78% year-on-year.

During the July-September quarter, its revenue stood at Tk78.61 crore but the gross profit was only Tk1.73 crore due to the increase in price of raw materials, utility, and freight cost.

The gross profit was also insufficient to repay the instalment of its Tk3.84 crore loan.

As a result, the company incurred a loss of Tk6.67 crore in the first quarter of FY23.

Evince Textiles was listed on the stock market in 2016. In its listing year, it reported a net profit of Tk18 crore.

But as the company's business deteriorated, its share price fell. Currently, its shares are trading below face value at the Dhaka Stock Exchange.