IPO opens on July 7:

Knit products grow after GSP+

Textured Jersey Lanka limited has launched an IPO to raise Rs.1.2 billion.

The company will issue a 12.21 percent stake or 80 million new shares at Rs.15 per share to raise funds for the expansion of production facilities, purchase state of the art machinery to increase production and efficiency and construct a water treatment plant to continue its environment friendly manufacturing practices.

The majority shareholders of Textured Jersey Lanka are Pacific Texured Jersey (45.6 percent), a fully owned subsidiary of Pacific Textiles Holding, Hong Kong and Brandex Lanka (34.3 percent).

The remaining 20.1 percent of shares are being held by 47 other shareholders. It is anticipated that a 29.9 percent of Textured Jersey will be held by the public. The IPO will open on July 7. The listing would enable the company to take advantage of potential growth opportunities in knit fabric in Sri Lanka and the South Asia region, said the CEO of Pacific Textile Bill Lam. "Volatility in cotton prices and regional currency appreciation are industry wide headwinds, but we believe these challenges will facilitate industry consolidation in the longer term and strong players will continue to gain market share," he said.

CEO, Brandix Lanka Ashroff Omar said that knit products are the fastest growing segment of the Sri Lankan apparel export market, which is growing strongly even after the end of the GSP+ concessions in August 2010 and Textured Jersey is the pre-eminent producer of value added knitted fabric.

Omar said that Sri Lanka has the potential to be a regional player in the textile and apparel industries. "If you compare per capita apparel exports of India, Pakistan, Bangladesh and Sri Lanka, is at the top. We can be a regional player because we have technical capability, skills and experience. In Brandex we are looking at various options to go to this target and listing is one of them and we are looking at longer term growth to achieve our objectives. There is a huge demand for knitted fabric in the region and half of the cost of apparel is textile. We expect to be the numbr one knitted fabric mill in the region and this growth cannot be achieved financed by bank credit," Omar said.

Textured Jersey is one of Sri Lanka's most sophisticated production facilities, manufacturing knitted fabrics for intimate apparel and sportswear industries. It is a major supplier to apparel manufacturers in Asia and end-chain retailers. Some of the largest clients of the company are Victoria's Secret, Marks & Spencer and Intimissimi. The 650,000 sq.ft production facility located in Avissawella has capacity to knit, dye and finish up to 2.5 million metres of fabric a month.

GW