Malek Spinning to upgrade machinery

Leaving the previously taken mega investment plan for setting up a new production unit, Malek Spinning Mills has now decided to replace or upgrade some of its existing machineries to enhance the production efficiency.

The fresh move is intended to replace its worn-out machineries by modern ones in its Gazipur-based factory at a cost of Tk 106.64 crore, according to a DSE filing posted on Tuesday.

Officials of the listed firm said the existing old machineries reduced its production efficiency, that’s why this investment decision was a must for the company.

The listed spinning mill will source the capital from internal sources, bank loans, and other sources, as per the DSE disclosure.

Earlier, the company announced in June 2021 to invest Tk 213.19 crore to raise the high-valued yarn production capacity. The company that time said its board had approved the proposal of installing a new plant at Bhaluka in Mymenshingh under the for BMRE project.

Once the project was implemented, it would have increased the sales revenue by 60 per cent, the firm had tated. But on Tuesday, the company announced its board of directors had decided to postpone the implementation of their proposed project in Bhaluika.

The company’s 2021 investment announcement had put a very a positive impact on its share prices,

The company usually used to see lakhs of its shares exchanging hands daily before that decision, but following the investment decision, 2.46 crore shares were exchanged on June 23 of 2021 and 3.11 crore shares on June 24 that year, which was the single-day highest in the last two years.

Talking to The Business Post, Company Secretary Syed Saiful Haque said, “The recent global economic crisis which has boomed the dollar value, refrained us from implementing the previous investment decision.”

Malek Spinning produces export-oriented knit yarn. The last share price of the company on the Dhaka Stock Exchange (DSE) was Tk 27.10 on Tuesday.

Malek Spinning, a sister concern of New Asia Group, has three subsidiaries— Salek Textile Limited, JM Fabrics Limited, and Newasia Synthetics Ltd.

But Newasia Synthetics Limited, a project promoted for setting up a polyester staple fiber and chips plant, could not be implemented due to the non-availability of a gas connection from Titas Gas.

In the first half of this fiscal year, the company reported a net profit of Tk 12.97 crore, down from Tk 37.24 crore in the same period last fiscal.

The company gave a cash dividend of 10 percent for FY22.

Till February this year, sponsors and directors held 47.34 per cent stake in the company, while institutional investors 13.72 per cent, and general investors 38.94 per cent.