A spinner dreams big in new year

After suffering revenue fall by 75% over the past three years, production cut by half and then the blow of the Covid-19 pandemic, Mozaffar Hossain Spinning Mills Limited is now all set for a good turnaround in the New Year.

A concern of SIM Group, the Narayanganj-based spinner will launch another unit, aiming at more than a doubling of its production capacity as well as revenue.

It has already finished the trial runs of the new unit and is ready to open production there in March.

Mozaffar Hossain, managing director of the spinning company and founder of the SIM Group, expects the new project to add about Tk200 crore to the annual turnover.

He has recruited 900 workers and officials for the new unit.

The company will announce the exact date of the inauguration of production at the new unit soon.

According to sources, the company's current annual production capacity is about 5,500 tonnes. After the new unit begins operations, the capacity will be around 13,000 tonnes.

The expansion project has been set up with 36,000 spindle machines, which required about Tk250 crore in additional investments. Most of the funds came from Islami Bank.

Currently, the spinning mill has the capacity to produce up to 20-count cotton yarn. The new plant has the capacity to produce up to 40-count yarn in the range of cotton to blended yarn, including polyester, lycra and others.

Mozaffar Hossain told The Business Standard, "Due to the expansion project, we had to shut down a number of rotor machines. Also, a recent fire at the factory hampered our production for several days. These have impacted our earnings."

Even so, the company declared a 1% cash dividend considering general investors' interest, he added.

Hossain hopes his company, riding on production through the new plant, will come back to profit-making with more revenues in the coming months.

Performance in stock market

The company's share prices soared by 82% to Tk16.60 till 24 December at the Dhaka Stock Exchange without any price-sensitive information.

However, on 27 December 2020, the company saw a price correction as some investors had booked profits by selling their shares.

Some officials of different brokerage houses said there was a rumour about an unusual price hike of the company's shares. The rumour was that the company was going to launch a new unit next month and this would increase its net profits significantly.

A group of investors used this information for the price hike, they added.

The company's revenue had been falling gradually for the three years till the 2019-20 fiscal year. During this period, its revenue fell by 75% to Tk28 crore and it incurred a loss of Tk12 crore.

According to the company's financial statement, it kept about 50% of rotor machines closed since 2018 due to power supply upgradation, machinery installation and gas supply shortage.

Brand nomination and major clients

As an export-oriented textile mill, it produces 100% cotton and blended fabrics to meet the requirements of overseas buyers.

It has nominations from several top brands, including Inditex, Next, VF, H&M, Lee, Walmart, Riders Lee, George and Tesco.  

Besides, nominations from Carrefour, Uniqlo, C&A, Tommy Hilfiger, Target, Abercrombie & Fitch, and PVH Corp are in progress. 

Mozaffar Spinning reserves about 50% of its production capacity for the holding company SIM Fabrics Ltd, while the lion's share of the rest of the capacity is used for ACS Textiles (Bangladesh) Ltd and Palmal Group of Industries.

The company was listed in 2014.