Interloop embarks upon ambitious expansion plan

Interloop Limited (ILP) conducted its corporate briefing session on Thursday to discuss 1QFY22 financial performance, while also commenting on the future outlook. To recall, the company posted Net Profit of Rs2.7 billion (EPS: Rs3.0) for 1QFY22, posting an increase of 94%YoY.

Regarding Vision 2025, ILP has planned a CAPEX of US$300 million in multiple segments including apparel segment, hosiery plant-VI expansion and capacity expansion in spinning and denim fabric mills. To note, 50% financing for US$300 million CAPEX will be generated through debt and remaining from internal funds.

With respect to the ongoing plant-V hosiery expansion, the company had already installed 50% machines (600 machines) which are in operational phase. Whereas, remaining 600 machines will be installed and start commercial production in 3QFY22.

In denim segment, the company is optimistic of reaching breakeven point by the end of FY22. Once breakeven point is met, ILP can enhance planned capacity to 40,000 pieces/day from current 20,000 pieces/day. To note, denim performance during FY21 wasn’t up to the mark due to cancellation of orders from the foreign players due to Covid which resulted in overall utilization to fall to 56%.

In knitwear segment, the expansion is expected to commence by 3QFY22 where the company has plans to bring this segment in commissioning phase latest by December 2022. The clientele for this segment would be same as hosiery segment.

Overall power requirement for the company is 25MW which includes both Faisalabad (21 MW) and Lahore plant (4 MW). The company also has Tri-Fuel generators of 15 MW at Faisalabad plant which can run on multiple fuel sources (Furnace oil, Natural gas and Diesel).

The company’s total cotton requirement is projected at 175,000 to 180,000 bales per year which will double post US$300 million expansions. Also, in order to mitigate the shortage risk, the company has covered its cotton order book till the end of this fiscal year.

The average selling price in hosiery and denim segments came to US$6 per dozen socks and US$7.53 per piece respectively which is expected to remain intact.

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