Textured Jersey to invest $4mn in new capacity addition

This approach has enabled TJL to build a strong and sustainable client base, cultivating deep relationships with major customers such as Intimissimi, Victoria's Secret, Marks and Spencer, Decathlon, and DBA brands - some of the world's largest apparel brands - allowing it to sustain profits and revenue growth, even in times of weak and uncertain demand conditions.

To sustain its competitive advantage and maintain growth, the company recently announced a number of significant investments and initiatives to add capacity and modernize its plant, to substantially reduce energy costs, and to make inroads towards successful regional expansion.

Further, to strengthen its senior management team and facilitate the next phase of growth, the company also recently announced the appointment of Sriyan de Silva Wijeyeratne as CEO/Managing Director of Textured Jersey.

The capacity expansion and modernization project is an estimated US$ 4mn investment, which is expected to add 10-12% capacity, enable specific fabric finishes and improve efficiencies. To facilitate the capacity expansion, a new water treatment plant will also be constructed. This effort is expected to be completed during the last quarter of FY2013/14.

To limit its dependency on the national grid and reduce the overall energy costs, TJL has commenced the construction of a multi-fuel boiler and power plant. This plant is expected to be commissioned during the early part of the 2014/15 financial year and has an estimated cost of US$ 4.5mn.

Once operational, the plant is expected to produce the total current steam requirement of the factory, and substantially reduce its dependence on furnace oil. The steam generated will also be used for air conditioning, thereby reducing electricity consumption. Additionally, the steam will also be used to generate 1 MW of power, reducing the company's dependence on the national grid.

The company also announced that it has entered into a Technical Service and Management Agreement with Ocean India Private Ltd (OCI), a knit fabric manufacturer located in India. The announcement states that TJL will receive a fee of US$ 780,000 per annum for the services provided to OCI.

The agreement is valid for a period of two years commencing from October 2013. In addition to the fee, this arrangement should provide TJL with insightful information and experience to ensure the successful implementation of its regional expansion strategy.

The combination of these initiatives is likely to ensure that growth is sustained both in the short as well as in the long run, thereby assuring the continuous delivery of value to the shareholders of Textured Jersey.

Brandix