Sunday 22 / December / 2024
Muscat: SV Pittie Sohar Textiles (FZC), which is establishing a $300 million cotton yarn manufacturing project in Sohar Free Zone, started production ahead of the target date and recorded profits in the first nine months of commercial operations.
The company reported revenue of $24.3 million and profit after tax of $6.4 million during the 9 months, from April 2019 till December 2019 (unaudited). The financials are in line with the company’s estimations for the financial year 2019-2020 in which the company expects to generate total revenues of $65 million. The company has signed Offtake Sales Agreements for the next 2-3 years, with yarn buyers worldwide to the tune of $875 million.
The company had commenced commercial production on the first unit in December 2018 and the second unit in October 2019, which reflects 50 per cent of the overall yarn manufacturing capacity proposed to be established i.e. equivalent $50 million of the project value. The same was funded in a debt equity ratio of 70:30 i.e. $105 in term loan from Sohar International and $45 million in equity from Shri Vallabh Pittie Group, The Sultan Special Forces Pension Fund and Al Jeel Al Saeid (Part of Al Thabat Holding Company).
The robust performance in the first nine months of operations itself demonstrates the promoters experience and execution capabilities in implementing textile projects in a timely and profitable manner. The same reiterates the company’s vision of being a performance and employment driven company with a focus on the most economical and efficient utilisation of available resources. The textile plant deploys best-in-class machinery and the manufacturing process is highly automated. The compact cotton yarn produced in the units are of premium grade with raw materials, namely organic cotton, being imported from USA, Australia, and Turkey whilst the finished product is being exported to Pakistan, Bangladesh and China.
The company is now proposing to start work on the remaining 50 per cent yarn manufacturing project ($150 million in value) and has mandated Sohar International for syndicating the Term Loan requirements of $105 million. The company already has in place term sheets from local banks for participating in the term loan and is in advanced discussions with other banks to achieve financial closure. The promoters are committed to fund the equity portion of $45 million for the expansion project.
The company proposes to complete the expansion during the financial year 2020-21 which shall denote the first full year of operations on the cotton yarn manufacturing project.
The company’s yarn manufacturing project is pledged to contribute significantly to the In-Country Value (ICV) for Oman in terms of generating significant export revenue to the tune of $240 million every year. It’s providing direct employment opportunities to more than 1,500 people, stimulating many indirect job opportunities and forming a solid base for various upstream and downstream entrepreneurial opportunities for SMEs.
SV Pittie Sohar Textiles is part of Shri Vallabh Pittie Group, India, a more than 100-year-old group and one of the largest manufacturers of compact cotton yarn in the world.
It is worth mentioning that the company has employed more than 1,000 Omani women in its project.
