Textured Jersey profit up 63 pct, eyes growth from acquisitions

July 26, 2016 (LBO) - Textured Jersey, a leading knitted fabric company, said profits after tax grew by 63 percent to reach 2.2 billion rupees in the year to March, with the company looking forward to growth from its recent acquisitions. Turnover grew by 30 percent over the previous year to reach 17.8 billion rupees, the company said releasing its annual report. Earnings per share was rupees 3.24, with the share trading on Tuesday at 37.70 rupees. Textured Jersey made two significant strategic acquisitions during the year, Ocean India Private Limited (OCI) and Quenby Lanka Prints Pvt Ltd, with the 100 percent ownership investments amounting to 2.7 billion rupees (USD 18.2 Million). Textured Jersey expects these acquisitions to "enable several strategic imperatives for sustained future growth," Chairman Wing Tak Bill Lam said. OCI is a knitted fabric manufacturer located in Visakhapatnam, India, with a daily production capacity of 18 tons. The manufacturing facility is equipped with infrastructure for doubling its present capacity. Quenby Lanka is Sri Lanka’s leading fabric printer, located in the Seethawaka Industrial Zone, in close proximity to the Textured Jersey manufacturing plant. In addition to the benefits of economies of scale that it offers, a manufacturing plant overseas also offers access to new markets via geographical advantages. Geographic diversification provides avenues for risk mitigation and for harnessing different competitive advantages, he said. TJL maintained a strong Balance Sheet despite cash outflows on two acquisitions, by optimizing working capital to remain unleveraged with a net cash surplus of 3 billion rupees. "TJL thus possesses significant capacity for debt financing, should a need arise in the future," he said. Last year, Sri Lanka’s garment exports to the EU declined in both Rupee and US Dollar terms due to subdued demand. Exports to the USA grew by 6 percent in US Dollar terms, and exports to other non-traditional markets also grew by 4.6 percent in US Dollar values. Lam said Sri Lanka’s reputation as a manufacturer for a large number of leading apparel brands continues to make it an attractive destination for inflows of new investments. However, they are mindful that Sri Lanka's global competitiveness as a manufacturing destination is being challenged with the opening up of new destinations such as on the African continent, and some South Asian and East Asian nations which enjoy lower costs of production. "Sri Lanka’s high labour and energy costs continue to be a challenge which dampens its cost competitiveness for all manufacturing industries," Lam said. Textured Jersey commissioning its own coal power plant is an important step towards meeting the challenge of high energy costs, he added. Lam expects their focus on technology and expansion as a regional player to be key solutions to meet rising labour costs. Textured Jersey said it is optimistic that the GSP+ for Sri Lanka will be resumed over the next two years and Sri Lanka’s apparel exports would begin to benefit from concessionary terms for its exports to Europe. "Sri Lanka is also likely to benefit from new bilateral and regional trade agreements that are likely in the context of improved relations and prospects with the international community."