Textured Jersey plans new unit here or abroad

Textured Jersey Lanka (TJL) which raised Rs. 1.2 billion in an Initial Public Offering (IPO) last July is gearing to expand either by acquiring a garment factory in Sri Lanka or abroad or setting up a plant in their own land, officials said.

"Our idea was to expand immediately (after the IPO), when the yarn prices were up, but they suddenly dropped and we were caught in between, which is why we couldn't expand (till this volatility subsided)," Ashroff Omar, Chairman TJL told the Business Times.

He added that the company is looking at either acquiring a manufacturing plant or setting one up. "We're looking at either acquiring a factory here or abroad. We're also considering the option of setting up a factory in a land that we acquired two years ago. We're eyeing all options," he explained.

When queried on commodity prices, Mr. Omar noted that the cotton prices are difficult to judge. "We took a beating on cotton prices in the second quarter. We feel that these prices won't swing widely and we're satisfied with the way we've handled them," he added. He said that the company is concentrating on productivity and better planning, etc in a bid to overcome price volatility in commodity. Global cotton prices fell sharply during the first quarter of last year and the company had to reduce its selling prices to accommodate this trend. "This was consistent with our policy to increase selling prices when cotton prices were on an upward trend."

He also added that the company eventually hopes to become a regional player. "This is what we are working on in the medium to long term," he said.

He also noted that Sri Lanka is a potential 'bride' in the eyes of large scale apparel sourcing firms with China's garments becoming too pricey. "China will always be the dominant apparel player, but with their currency appreciation and cost escalation, they have managed to shift up the value chain," Mr. Omar explained, adding that with China becoming wealthier, the apparel buyers are eyeing other bases to source materials from.

This is why, according to Mr. Omar, Sri Lanka has to be aggressive in its efforts at tapping the buyers. "We have potential in the US and the EU and with the costs of buyers (who source from China) escalating, they are bound to be looking at another less expensive buyer to source from," he added. Located in the Seethawaka Industrial park, TJL has M&S, NEXT, Victoria's Secret and Decathlon among its customer base.