January 14, 2021 (MLN): In compliance with the requirement of the Pakistan Stock Exchange (PSX) and the Securities & Exchange Commission of Pakistan (SECP), Interloop Limited (ILP) has issued its progress report for the quarter ended December 31, 2020, comprising the updates of its two projects related to Denim Division and Hosiery Division.
To recall, ILP carried out a successful IPO in March 2019 to finance its two projects namely; the Denim stitching unit, and a Socks knitting unit in Faisalabad, Khurrianwala.
The denim division is located at 8 km Manga Raiwind Road, Lahore, and has been functional since November 2019 as originally planned. Building & Infrastructure for the entire project is nearly fully complete.
The Company has successfully completed the first phase of the project by installing a capacity of 20,000 units per day. The project started its commercial operation in the Second Quarter of FY2020. COVID-19 Pandemic has affected the marketing activity and our ramp-up plans. However, the project is gradually making its place in European and North American markets, the report revealed.
As per the progress report, in the second phase, the company has 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 impacted the economies and demand all across the globe, the project activities have been slowed down.
Nevertheless, the management is fully committed to the project to enhance its capacity and strongly believes that the completion of the project will bring significant benefits to the Company and its shareholders.
Furthermore, the project cost has been enhanced to PKR 8.325 billion from the initial estimate of PKR 6.75 billion for the Denim project due to the devaluation in PKR and trial run losses. The increase in cost will be financed by internal cash generation.
With regards to the implementation update of Hosiery Division V, Phase 2 of Pilot Unit for Plant 5 had been successfully completed and the unit is currently operating with 430 knitting machines utilizing existing infrastructure. During the quarter under consideration of FY2021, the Company has successfully installed and commissioned 100 machines. The production capacity is 12,000 dozen per day, which equates to roughly 29% capacity of the main plant designed to produce 42,000 dozen per day.
In supplement to the above, the Land for the project has been procured. The foundation of Building construction has been completed up to plinth level and earth filling. Furthermore, the excavation of unit # 1 is 70% completed and PCC work is in progress.
The management of the company is gradually increasing the pace of the project considering diligently market demand and the global economy moves.
Moreover, due to the devaluation in PKR and trial run losses, the Project cost has been enhanced to PKR 5.9 billion from the initial estimate of PKR 4.5 billion. The increase in cost will be financed by internal cash generation, the report revealed.
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