Textured Jersey braces for key acquisitions
Textured Jersey Lanka PLC (TJL) will soon be acquiring Ocean India Private Limited (OIPL) in India and Quenby Lanka Prints (Pvt) Ltd under the company’s expansion programme, a top official of the company said.
TJL’s independent valuation of OIPL in India and Quenby Lanka to further its acquisition plans is poised for completion in a few months time.
“We engaged E&Y to carry out these valuations and they will be done in a few months,” Hasitha Premaratne, Director TJL told the Business Times. He added that TJL is looking to inorganically expand via acquiring OIPL running mill in India (to facilitate immediate production) and is currently undertaking test orders before the integration. Analysts say that the company is poised for future growth considering its timely strategic initiative of commissioning a multi fuel boiler easing pressure on cost margin from 1QFY16E onwards and full effect of the near 12 per cent capacity addition which is expected to be materialized during this same forecast period.
Mr Premaratne added that as TJL has an energy intensive operation, the commissioning of the multi fuel boiler in its factory premises in Avissawella will secure a substantial cost savings during FY16E.
TJL expects to inorganically expand capacity via acquiring a running fabric mill as an initiative to become the leading solutions provider of weft knit fabric in the South Asian region, he said, adding that the company’s strategy is to undertake more profitable and research and development driven orders in line with the turkey model concept (R&D driven value added fabric orders).
“We want to expand from basic cottons to other materials and in terms of this, we want to bring in process innovations to fabrics that we manufacture,” Mr Premaratne said.
He added that the acquisition of Quenby is in line with this. “We want to set a bigger footing in terms of additional products in print fabric manufacturing,” he said.
According to him, the prospects of GSP-Plus concession in future would further augment TJL’s momentum where European customers account for nearly 65 per cent TJl’s revenue.
The company recorded its highest ever annual net profit of Rs. 1.3 billion for the year ended 31 March 2015, an increase of 16 per cent year-on-year. This result was achieved on the back of a Rs. 512 million net profit for the quarter ended 31 March 2015, representing a 46 per cent increase.
According to Mr. Bill Lam, Chairman of Textured Jersey, the strong quarterly performance enabled the company conclude the year with a record profit despite the slowdown in sales experienced in the early part of the year, attributed to unusual and extreme weather conditions in the United States.