Utex JSC and Melange JSC textile factories in south Kazakhstan to restore production

The textile industry of Kazakhstan has gone through a process of sharp cutback over the past decade. Baiterek National Managing Holding and its subsidiaries, Kazakhstan Investment Fund JSC and Development Bank of Kazakhstan JSC, together with akimat (regional executive) of South Kazakhstan district have found mechanism to put back textile factories in Symkent into working condition.

With the launch of Melange JSC and Utex JSC factories, yarn production capacity will reach 17.8 million metric tons per year, production capacity of finished fabrics – 8.4 million running meters a year.

Further, the completion of construction and commissioning of Utex kz JSC plant expected by 2016, yarn production capacity will reach 8.4 million metric tons per year, production capacity of finished fabrics – 10.6 million running meters a year.

As of now, the factory employs more than 400 people, and after three textile mills reach the full production capacity, over 2,000 people will be provided with jobs.

Of the total production, 30 percent of products (bed linen, terry products and working clothes ) will be diverted to the domestic market of Kazakhstan. Some 70 percent of products (bed linen, terry products, carded, combed, carded and combed yarn, terry fabrics) will be exported to countries of Europe and China.

Kazakhstan Temir Joly (the railway of Kazakhstan) has also entered into a long-term contracts for the purchase of finished products produced by Textiles.kz group of companies, namely, bed linen and working clothes.

The Utex JSC and Melange JSC textile factories located in the city of Shymkent of the South Kazakhstan district, belonging to the group of Textiles.kz companies remained idle for several years. The main problem of the enterprises is the lack of working capital to purchase raw material and cover production costs. The global financial and economic crisis of 2008-2009 and the sharp fluctuations of prices for raw cotton on the world markets led to a default of Utex JSC and Melange JSC enterprises.

The two factories were included in the post-crisis recovery program until 2020. The State Commission for Economic Modernization in May 2014 approved the transfer of rights for the obligations of Textiles.kz group of companies from Development Bank of Kazakhstan JSC to the Investment Fund of Kazakhstan JSC.

A plan for improvement of the textile enterprises, according to which the Capital logistics LLP (100-percent subsidiary of Kazakhstan Investment Fund JSC) is committed to provide raw material and control of all stages of production. In turn, the Development Bank of Kazakhstan LLP has provided a credit line to the Capital logistics LLP for the completion of the Utex kz JSC production complex and purchase of cotton for Melange JSC, Utex JSC and Utex kz JSC.

Baiterek Holding, together with the Development Bank of Kazakhstan and Kazakhstan Investment Fund found the mechanism with which it becomes possible to restore production and realize their launch, said the head of the Investment Fund of Kazakhstan Yerlan Aytaliev.

For the year’s work, the Investment Fund of Kazakhstan returned assets and cash worth more than $15 billion KZT to the state, and one of their main tasks is to improve and revive the idle plants so that they can create jobs, pay taxes, thus bringing economic benefits to the country.

Kazakhstan is making conscious efforts to develop its textile industry. A Special Economic Zone “Ontustik” has been created in South Kazakhstan region as one of the first initiatives for creation of textile clusters. It is located in an area of 200 hectares in the vicinity of Shymkent city which is the administrative center of South Kazakhstan region and has proximity to good infrastructure and raw material. Investment in this SEZ is intended to cater to domestic textile market and also for export-oriented purposes.