Tuesday April 23, 2024

Interloop Limited plans $300mln investment in textile production

By Javed Mirza
May 07, 2021

KARACHI: Textile company Interloop Limited (ILP) has planned to invest $300 million to expand its production capacity and install apparel factory to capture the pent-up demand in foreign markets.

“The management is targeting to double its revenues by FY26. We are modelling revenue growth of 46 percent over the next three years and earnings growth of 41 percent,” Muhammad Maqsood, president/group chief financial officer of Interloop said at a briefing organised by KASB Securities.

ILP is Pakistan’s leading textile player, has an immense growth potential as it has continuously expanded and diversified its product line. Nearly 90 percent of its revenue comes from exports where major customers in the hosiery segment include Nike, Target, Puma and Adidas.

The four clients contribute more than half of the export revenue. With the rollout of vaccination in US and European region, the demand is expected to remain resilient in the coming months. This coupled with order diversion to Pakistan from US/China trade spat and shift in orders from India and Bangladesh during pandemic will likely help ILP to achieve a sustainable growth going forward.

In July-March, exports of textile and clothing grew 9.1 percent to $11.35 billion. Value-added sectors drove the growth.

“What is extremely noteworthy is that ILP has the first right of refusal based on strong commitment and high

quality, giving it a distinctive edge over competition,” Maqsood said.

“To highlight, the denim expansion is on track, and is expected to complete in 4QFY21. In the hosiery segment, capacity would be enhanced in a phased manner starting from September 2021 as the company is operating at maximum rated capacity.”

Maqsood said the company continued to expand to address rising demand and enhance footprint.

An industry official said there are concerns about European Union (EU) threat of revoking tax concessions to Pakistan’s exports. However, EU is not likely to pursue this resolution as their supply lines are choked with rising COVID infections and deaths in India and Vietnam.

Moreover, the European demand has not picked up yet as the continent is still struggling against the pandemic.

Textile sector industries with higher sales concentration to Europe are in troubles and certain units are shutting down, while the exporters catering for US markets are running on full capacity.

US is increasingly becoming a more important market with demand picking up at a fast pace. Its official recently told the finance minister about the growing interest of U.S. companies to explore economic opportunities in Pakistan.