Karachi July 26 2021: Work on expansion of denim stitching unit and Hosiery Division are underway but slowed due to COVID 19, as per report issued by the company.
Cost of both these projects has been enhanced due to the devaluation in PKR and trial run losses. However, increase in cost will be financed by internal cash generation.
Muhammad Maqsood, Group CFO Interloop
In second phase of Denim stitching unit established in Lahore, company is planned to enhance the capacity to 40,000 units per day. The project is completed in terms of infrastructure since nearly 83% of the budget has already been consumed. However, considering the impact of COVID-19 which has adversely affected the economies and demand all across the globe, the project activities has been slow down. The management is striving to bring the first phase into profit before going in to second phase of the Denim Project.
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Project cost of Denim Stitching unit second phase has been enhanced to PKR8.325billion from initial estimate of PKR6.75billion for Denim project due to the devaluation in PKR and trial run losses.
Interloop has successfully completed first phase of the project by installing capacity of 20,000 units per day. The project started its commercial operation since Second Quarter Fiscal Year 2020. COVID-19 Pandemic has effected the marketing activity and our ramp-up plans. However, the project is gradually making its place in European and North American markets.
Phase 2 of Pilot Unit for Hosiery Division Plant 5 had been completed successfully and the unit is currently operating with 430 knitting machines utilizing existing infrastructure. The production capacity is 12,000 dozen per day, which equates to roughly 29 percent capacity of the main plant designed to produce 42,000 dozen per day. During the quarter under consideration, Company established LC's to import further 191 knitting machines. LC for 580 knitting machines along with necessary axillary equipment already established in March 2021 quarter.
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The Land for the project had already been procured. Construction activities are paced up and the foundation of Building completed up to plinth level and now PEB structure is in commissioning phase. Furthermore, the excavation of unit # 1 was completed and PCC work is in progress. Working on power and utilities related works also been executed.
The management is now aggressively working to complete the project to cater market demand. Project cost has been enhanced to PKR5.9billion from initial estimate of PKR4.5billion for the project due to the devaluation in PKR and trial run losses. The increase in cost will be finance by internal cash generation.
