Investment Galore in spinning despite Covid
The spinning sector in Bangladesh witnessed a major jump in investment last year as entrepreneurs set up 26 new mills to meet rising demand despite uncertainty in the global apparel supply chain owing to the pandemic.
Entrepreneurs invested Tk 5,970 crore in the new manufacturing plants, adding more than 745,400 new spindles to their combined capacity, according to data from the Bangladesh Textile Mills Association (BTMA).
Mondol Group, one of the leading garment exporters, has invested Tk 450 crore to establish a spinning mill at Mirzapur in Tangail.
The plant went into production on December 15 and is producing 50 tonnes of cotton yarn per day. The raw material is used in manufacturing garments items for international buyers.
The company now plans to expand the production capacity to 75 tonnes with an investment of another Tk 300 crore this year. It has installed 77,000 spindles through the first investment and another 40,000 spindles will be added this year.
"I have a lot of demand for garments from international clothing retailers and brands. So, I invested in the spinning sector so that I need not to rely on others or on imports for fabrics," said Abdul Momin Mondol, managing director of Mondol Group.
The new factory may sell 30 per cent of the yarn to others.
Eighty per cent of the yarn produced at the mill is purely cotton yarn, while the remaining 20 per cent is of mixed yarn from cotton and artificial fibre yarn. The demand for man-made fibre garment items is rising worldwide, he added.
Israq Textiles Ltd, a Shreepur-based spinning mill, invested $20 million to set up a factory to produce 50 tonnes of yarn a day. Currently, it produces 120 tonnes of cotton yarn.
"The additional investment and production will not create any surplus yarn in the local market as demand is rising and new garment ventures are coming up every year," said Fazlul Haque, managing director of Israq Textiles.
He sees a lot of potential for the spinning sector as apparel shipment from Bangladesh is growing.
Garment shipment rose 28.02 per cent year-on-year to $19.9 billion between July and December. Of the sum, $11.16 billion came from knitwear sales, which was up 30.91 per cent, and $8.73 billion from woven items, an increase of 24.50 per cent.
"The upward trend of the garment export will continue up to June this year as we have received plenty of orders," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association.
The volume has risen by 15 per cent in the last few months. So, the investment is increasing in the primary textile sector to meet the growing demand from garment exporters, he said.
In Bangladesh, there are 500 spinning mills.
"Majority of the existing mills are expanding their capacity almost every month because of higher demand from local garment manufacturers and exporters," said Monsoor Ahmed, chief executive officer of the BTMA.
Moreover, manufacturers prefer locally made yarn to reduce long lead-time as they find it difficult to supply garment items on time when they are manufactured from imported yarn and fabrics, said Ahmed.
Mahin Group, one of the leading woven fabrics makers, is constructing a spinning mill at a cost of Tk 500 crore.
The plant, located at Narsingdi, will have 55,000 spindles and will produce 35 tonnes of yarn for woven fabrics.
It is expected to go into production by the end of 2023 and will meet its own demand.
Currently, the group consumes 50 tonnes of yarn a day to produce woven fabrics but it has to buy yarn as it has no spinning mill.
"Even if I produce 35 tonnes of yarn in my spinning mills, I will have to procure 15 tonnes of yarn from other mills if I consume at the current pace," said Abdullah Al Mahmud Mahin, chairman and managing director of the group.
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