Malek Spinning to shut down its RMG unit

Malek Spinning Mills Ltd will shut down its RMG unit that incurred losses after the expiry of lease agreement, said the company.

 “The board approved the proposal of closing Salek Textile down from December 31,” said the company in a filing with the Dhaka Stock Exchange on Sunday.

The decision was taken due to the unit’s accumulated losses and expiry of lease agreement of the factory building and premises, it said.

The RMG unit was established in August 2014. It is a semi-automated denim garments production facility. Other two units of Salek Textile are Rotor and Denim Fabric established in 2009 and 2011 respectively.

However, the two units ‘Rotor and Denim’ will remain in production, said an executive of the bank.

Analysing the latest annual report of Malek Spinning, it was obtained that Salek Textile bounced back from its previous year’s losses and posted a significant profit in FY21. At the same time, its RMG unit witnessed a stellar growth in production.

According to the report, Salek Textile made a net profit of Tk 6.08 crore in FY21, when it posted a loss of Tk 29.46 crore in FY20. The net profit was Tk 4.54 crore in FY19. 

The RMG unit’s production increased around 8 percent to 42.06 lakh pieces in the last financial year.

The liabilities of the unit will be settled by selling of assets of the unit (factory plant and machinery and others) and borrowing from Salek Textile. The parent company Malek Spinning will not be required to provide any funds for closing-down of the unit, said the company. 

Malek Spinning, which holds 97.925 per cent share in Salek Textile, has two more subsidiaries--Salek Textile, Newasia Synthetics and JM Fabrics Ltd. But the Newasia Synthetics project is not in production due to the gas crisis.

The project could not be implemented due to non-availability of gas connection from Titas Gas Transmission and Distribution Company Ltd, said the report.

The Rotor unit produces open end yarn of various counts having a capacity of 14,621,000kg yarn per annum.

The fabric unit produces denim fabric of various size and grade having capacity of 9,600,000 yards and the RMG unit produces denim products having capacity of 6,600,000 pcs per annum. 

On Sunday, Malek Spinning share declined 3.19 per cent to Tk 27.30 on the Dhaka Stock Exchange.