A leading export-oriented denim fabric producer Shasha Denims is set to increase its production capacity by 180% in next one and a half year through raising fund from the stock market.
“The production will be raised from 10 lakh yards to 28 lakh yards in next one and a half years,” said Jamal Abdun Naser, a director of the company based in Dhaka Export Processing Zone.
He said the fund to be raised through IPO will be used to purchase modern machinery to improve the quality of denim fabrics and also increase volume of production.
He briefed a group of journalists at the Shasha Denims manufacturing plant premises at Dhaka EPZ yesterday. The company’s Managing Director Shams Mahmud and chief financial officer Md Ahasanul Huq were also present.
Receiving green signal from the Bangladesh Securities and Exchange Commission to go ahead with IPO plan in October last, the company will raise Tk175 crore through the IPO with 88% of the fund to be spent on the expansion.
It will also use Tk18.23 crore for partial repayment of bank loans and the rest Tk 2.77 crore for bearing the expenses of the IPO proceedings.
The denim producer will offload five crore ordinary shares at an offer price of Tk 35 each, including a premium of Tk 25 for each Tk 10 share. The IPO subscription will begin tomorrow (December 14) and end on December 21.
Naser said there is a huge demand-supply gap for denim fabrics both at local and international markets. “Being one of the high quality denim fabric producers in the country, we want to exploit the opportunity.”
Every month, 25 local makers produce 30m yards of denim fabrics while the demand is nearly 60m yards, he said.
To meet the demand, 30-35m yards of such fabrics are imported every month at $75m on an average from different countries, including China, India and Pakistan.
Starting commercial production in 2000, Shasha has around 15% of Bangladesh’s market share, after Partex Denims with 17%, followed by Envoy Denim with around 13%.
The company is denim supplier to world’s top retailers and brands, including H&M, Uniqlo, Levis, Nike, Tesco, Wrangler, s.Oliver, Hugo Boss, Puma, Primark, JC Penney, C&A, Tommy Hilfiger, Inditex, Walmart, M&S, Calvin Klein, Diesel, Gap, Channel, Dior and G-Star.
The main raw material used for the production is yarn, which the company imports mainly from China, India and Pakistan.
According to the audited financial reports for the year ending on December 31, 2013, the company’s earnings per share stood at Tk 3.73, while its net asset value is Tk 52.95 per share.
