Malek Spinning’s subsidiary to invest nearly Tk 157cr

Malek Spinning Mills Ltd has approved an investment of around Tk 157 crore by its subsidiary, JM Fabrics Limited (JMFL), to set up facilities, including one for yarn texturising and covering.

Texturising is a process in which loops, crimps or coils are introduced into yarn to change its physical appearance. Covering essentially refers to a core yarn wrapped with another yarn or filament.

The funds will be generated from the JM's internal sources and bank loans, the Malek said in a disclosure on the Dhaka Stock Exchange (DSE) website yesterday.

The Malek, a listed company which owns 99.99 percent of shares of the JM, will not need to provide any funds, it added.

Once the facilities are established, the JM's manufacturing capacity will increase from 5.29 crore rolls to 5.49 crore rolls per annum, according to the disclosure.

This higher production capacity will increase the sales and profitability of the company and there will be higher value addition due to improvement of product quality which will enable the company to sell its products at higher prices, it read.

The Malek's board of directors has also given the JM the authority to use its 52,000 square feet of an unutilised warehouse for scrap on its factory premises in Gazipur at Tk 15 per square feet per month, it said.

The rent is negotiable from time to time, it added.

The boards of directors of both companies have guaranteed abiding by the regular terms and conditions of the trade and declared that no conflict of interest will arise, the disclosure added.

Stocks of the Malek remained the same at Tk 27.10 at the DSE yesterday. Its paid-up capital is Tk 193 crore.

The company has a reserve of Tk 603 crore, according to the DSE data.