Envoy Textiles plans to set up a spinning unit at a cost of about Tk 235 crore to produce yarn, 80 percent of which will be used for its own consumption.
The unit, which is expected to start commercial operation in the first quarter of 2016, will sell the rest 20 percent of its production to others.
HSBC and Brac Bank will finance about Tk 156 crore of the project cost and Envoy will provide the rest, the company said in a posting on the website of Dhaka Stock Exchange yesterday.
Envoy, a denim maker, has already finalised the plan for the unit that will have a production capacity of 17,500 tonnes yarn a year.
“We will be a full-fledged textile manufacturer after completion of the unit at Bhaluka in Mymensingh,” said Abdus Salam Murshedy, managing director of Envoy Textiles that supplies clothes to Wal-Mart, H&M, JC Penney, Gap, Carrefour, Zara and Next.
The bank borrowing will be under offshore financing arrangement for a maximum of five years, subject to final approval from authorities.
The company, which got listed in the stockmarket in 2012, hopes to make annual profits of Tk 40-45 crore from expected turnover of Tk 390 crore a year with the beginning of production at the unit.
The major capital machineries to set up the unit will be imported mainly from Germany, Switzerland and Japan.
The news, however, failed to cheer up the investors, as the share price of the garment maker declined 1.93 percent on the premier bourse yesterday from the previous day.
Each share traded between Tk 52.9 and Tk 49.8, before closing at Tk 50.6.
Envoy's net profit rose 2.64 percent year-on-year to Tk 43.54 crore in 2013.