With Tk300cr investment, Far Chemical enters spinning business
The company may jump into the commercial production after one-month trial run
Far Chemical Industries entered the spinning industry by starting production on a trial basis Monday, according to a company disclosure, as the stock market-listed firm aims at tapping deemed export potentials.
The business diversification costs Far Chemical Tk300 crore in the spinning investment, according to the company disclosure on the Dhaka Stock Exchange (DSE) website.
The firm has arranged the investment by bank loans and from its own sources.
The company's daily spinning capacity is 18 tonnes, but the rolling blackouts now cripple 30% of the production, according to the official data.
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Far Chemical initially set up 33,600 spindles in the production line in Narayanganj's Rupganj, as the new spinning machines have been imported from Germany, Italy, Japan and Switzerland.
The annual revenue of the spinning unit will be around Tk230 crore, while 15% net profit will be generated from the total revenue, said the management of the firm.
Md Humayun Kabir, director of marketing of Far Group, said they will jump into commercial production after one month if the trial yields positive outputs.
He said there is a huge potential in the local apparel backward linkage sector and it is burgeoning day by day. "We set up the spinning unit to meet the growing demand," he added.
Far Chemical – a concern of Far Group – manufactures and exports chemical products to different export-oriented textiles, dyeing, and apparel industries.
Humayun Kabir said their chemical factory in Cumilla is now under construction. If the plummeting chemical market takes a further nosedive, the spinning set-up will replace the chemical production lines in Cumilla Export Processing Zones.
Despite the major development, the company's share price declined on Monday as overall price indices in the DSE were downward.
The last trading price of Far Chemical shares was Tk12.20 at DSE on Monday.
Far Group was established in 1993 to make 100% export-oriented sweaters. The group has two other firms – ML Dyeing and RN Spinning Mills that were listed in the capital market.
Earlier, Far Chemical Industries Limited decided to merge with SF Textile Industries Limited, a non-listed public limited firm, subject to the approval of shareholders and relevant authorities.
As per the statement, Far Chemical will take over all assets and liabilities of SF Textile Industries – a 100% export-oriented yarn-spinning company that has been in operation since 2016.
Far Chemical Industries recommended a 1% cash dividend for the year ended on 30 June 2021.
As of 30 September 2022, the sponsors and directors jointly hold 30.24% of shares, institutions hold 13.81% of shares and the general public holds 55.95% of shares in the company.
