Reliance Spinning to expand its production facility

Biratnagar, Apr. 4

Reliance Spinning Mills Limited is expanding its production facilities at a cost of Rs. 4.5 billion.

The largest spinning mill in the country is adding two new production plants to its already existing six manufacturing units. About Rs. 10 billion has been invested in the industry so far. After the addition of the new units, total investment will reach Rs. 15.5 billion.

According to the Manager of the company, Mahesh Kumar Pokharel, the new plants will be installed adjacent to unit six. In the first phase, plant seven will be installed which will cost Rs. 2.5 billion.

Machines and equipment for the new production plant have begun to arrive at the factory and the management said that it would be completed within six months while construction works by June this year. The construction for foundation for the building of the plant has neared completion.  

However, with the recent night-long load-shedding had posed challenge to the company that uses about 10 megawatt electricity a month. Pokharel said that the government had urged them to expand industry but worries were mounting with the unofficial load-shedding in place in recent weeks.

"Running generators to operate the factory means increased production costs and lower profits," he said.

Chief Operating Officer of the company Ashwini Kumar Gupta said that the company has 30,000-tonne production capacity a year and it runs 24 hours a day in three shifts and 362 days a year.

About 60 per cent of company's products are exported to India and 15 per cent to Turkey, with the remaining 25 per cent consumed in Nepal. Approximately, 80 per cent demand for woolen yarn in Nepal is met by Reliance.

The first two plants of the mill, located in Khanar of Itahari Sub-Metropolis in Sunsari district, were installed in March 1995 and it started production from January 1997. It was expanding its capacity even during the decade-long armed conflict.

Its production capacity is about 30,000 tons yarn a year and witnessed a turnover of Rs. 7.79 billion the last fiscal year 2020/21, earning profits of Rs. 750 million. It has Unit B at Khanar of Sunsari as well. Combined production capacity of both the factories is more than 36,000 tons a year. All workers of the company received bonus equal to their salary for 4.25 months. It is the largest employer in the country with direct jobs provided to 4,000 Nepali citizens, of them, 1550 are women.

The company is also planning to issue the initial public offering (IPO) to the public to raise money for further expansion. According to Pokharel, the process of IPO would have witnessed greater success by now there was not the issue of illegitimate acquiring of shares of Sarbottam Cement by the chiefs of the Securities Board of Nepal and Nepal Stock Exchange Limited. Sarbottam Cement was the first private sector company that was planning to issue the IPO as per book building method. 

 Published in The Rising Nepal daily on 5 April 2022.