Hayleys Fabric acquires South Asia Textiles from Ambeon Holdings

Making further inroads into the highly lucrative fabric manufacturing, Hayleys Fabric PLC last week acquired South Asia Textiles Limited from Ambeon Holdings PLC, for a consideration of Rs.3.95 billion. 

The acquisition will add more heft to the Hayleys group’s knit fabric maker, which is looking extensively at expanding its capacity, “for higher value-added fabrics for exports by aligning with world-class Tier I brands under its portfolio of customers”, the company said in a stock exchange disclosure after the deal went through.

The company said it bought a 97.68 percent stake from Ambeon Holdings PLC and 1.16 percent from a minority shareholder, in a cash deal carried out on April 23. 

South Asia Textiles Limited has its manufacturing facility in Pugoda, with the capacity to manufacture 800,000 kilograms of textiles per month and employs over 1,100 people. The company generated revenues of Rs.9.1 billion in the year ended on March 31, 2020, up from Rs.8.3 billion and reported an after-tax profit of Rs.23.2 million. It had assets worth of Rs.6.2 billion. 

It was transpired last week that the local fashion designers and manufacturers of textiles to the local market are found hamstrung due to short supply of fabrics, after restrictions on imports, as they were scrambling to find fabrics when the demand returns with the festive shopping season, ahead of the New Year, after nearly an year of lacklustre sales.

South Asia Textiles Limited last year projected that the domestic industry was in the midst of an unprecedented surge in demand towards the incumbent year, after the country successfully contained the virus.

South Asia Textiles Limited stands among the top five major textile manufacturing companies in Sri Lanka and manufactures weft knitted fabrics made primarily from cotton and cotton/polyester blends while it regularly offers specialised fibres such as viscose and modal as part of the company’s product mix.

Since the inception of the company in 2004, it became one of the principal suppliers of knitted, dyed, finished, printed, brushed, suede, pre-shrunk and specialised performance-based casual, lounge, sports, medical and intimate fabric for globally renowned brands. 

As the pandemic reshaped the demands and desires for clothing around the world, the company pivoted its operations into manufacture of specialised fabrics – including fabrics with anti-viral and anti-bacterial chemical finishes – for face masks and related personal protective equipment (PPE), which helped sustain the business during the initial months of lockdown, before it returned to 100 percent capacity between May and June 2020. 
Hayleys Fabric also did the same as it focused on ‘Health Clothing’ by working with the large garment makers to shift from fashion and sports-related fabrics to health-related fabric. 

However, as the people in the West and eurozone are returning to normality due to lessening restrictions, they have restarted spending the most on clothing, after airlines, the data showed. Hence, the local fabric makers as well as garment makers appear to be adding more heft into their capacity to confront a surge in demand from their key customers a variety of clothing categories, as people are venturing out for work and other activities, triggering demand for more clothing than last year.