UTE, textile firm likely to see pick up in its exports to Europe

United Towel Exporters (UTE) leading exporter of towels, textile made ups, bed linen and garment from Karachi, Port city of Pakistan following acquisition of a 70 percent stake in the Netherlands based Vespo Groep BV hopes that its exports to Europe will go up significantly with the expansion of business.

Vespo Groep is a textile market leader in designing, producing and supplying products throughout Europe. The group’s expansion to Nordic countries will give a boost to United Towel’s export prospects.

The acquisition of the majority stake in the home textile company would push United Towel’s exports to $13.50 million in 2018, up 221% from the existing $4.2 million, the Finance Division told the cabinet’s Economic Coordination Committee (ECC) in a meeting held on December 29, 2017.

It highlighted the projection while asking the ECC to allow United Towel to remit 8.425 million euros ($9.39 million) for acquiring the 70% equity in Vespo Groep BV. The State Bank of Pakistan (SBP) had forwarded the company’s request for remitting the money.

Sponsors of United Towel have more than 30 years of experience in value added textile manufacturing and exports of diverse products for the hospitality, health care, home fashion and work wear industries.

The ECC was informed that 40% of profits would be repatriated to Pakistan after two years whereas the remaining 60% would be reinvested to finance business growth.

The payback period of the proposed investment was expected to be about 13.5 years with the internal rate of return estimated at 26.72%.

The proposed equity investment would be financed from the export proceeds retained in special foreign currency accounts of the company. According to the SBP, textile exporters can keep 10% of their export proceeds in foreign exchange.

The Finance Division recalled that the ECC had decided in 2002 that the central bank should approve overseas investment proposals of up to $5 million whereas investments worth more than $5 million should get the go-ahead from the ECC.

It revealed that the SBP had evaluated the proposal and was seeking permission for remitting $9.39 million on the condition that the company would fund all future foreign remittances from the same account.

During the discussion, the privatisation minister emphasised that feasibility of the proposed investment should first be evaluated to ascertain its economic viability. Responding to that, an SBP representative said the feasibility had already been conducted and the proposed investment was found viable.

The investment was going to the Netherlands’ Vespo Groep BV, which was a strong company in Europe, the meeting was told.

UTE has four factories with completely integrated units (weaving, dyeing, finishing & packaging) complimented with state of the art laboratory, Its four factories cover an area of 600,000sq ft. Their production systems are flexible, helping them to tailor their products to customer specification, Thus becoming a one stop-shop for their customers.