High cost restrains Sutlej from setting up textile plant in Ethiopia

YarnsandFibers News Bureau 2014-04-15 08:00:00 – New Delhi

Sutlej Textiles and Industries Limited, India's leading textile producers with a value-chain extending from yarns to fabrics to home textile. The company’s strong endeavor to set up a textile plant in for the past seven months has failed to achieve any success till now. They are in communication with Ethiopian government officials to push their plan ahead. Sutlej has a turnover of 20 billion rupees or close to eight billion birr annual

According to Manoj John, vice president for strategic initiative, the foremost hurdle is the high cost of construction and transportation in Ethiopia than most countries, mainly compared to India, where the company is well established.

If these costs can be reduced, Sutlej is keen on making an initial investment in 25,000 spindles immediately and later increasing its investment to 50,000 spindles in the second phase. With an estimated investment to the tune of 25,000 birr per spindle, this will cost around 625 million birr for the first phase alone. Sutlej plans to submit their formal business proposal to the government in a month or two.

At present, almost 15 foreign textile companies mainly from South Korea and India are awaiting for the construction work of the Bole-Lemi industrial zone located east of the capital, to complete. Some of these companies have already done their initial payments while some have started putting in machineries in the new sheds for production.

John has planned to have a fresh round of meeting this time with the minister of agriculture to getting acquainted with the federal and regional set up. As the earlier meetings with both federal and local government officials about accessing a plot of land was no success.

If this round of meeting goes well, Sutlej would invest in 200 acres of land to build a textile plant that will integrate spinning and weaving. The company is also looking at Terry towel manufacturing as another alternative.

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