Kathmandu: Sarbottam Spinning Mills is set to expand its production capacity with an additional investment of Rs 2.05 billion. The company, which currently produces 50,000 kilograms (50 tons) of yarn per day, plans to increase output by 50 percent to 75,000 kilograms daily through the new investment.
The company, which operated for many years under the name Jagdamba Spinning Mills, recently rebranded itself as Sarbottam Spinning Mills.
Company Chairman Bishnu Neupane said the expansion is being carried out to meet rising demand for yarn. Operated by the established business conglomerate Saurabh Group, the mill currently manufactures and sells yarn worth more than Rs 4 billion annually.
To boost production, the company is installing advanced “Vortex” technology manufactured by Japan’s Murata Machinery. Neupane said the expansion project is now in its final phase.
“We are expanding the plant to meet growing market demand for yarn,” Neupane told Clickmandu. “The capacity expansion work is nearing completion.”
Everest Bank and Nabil Bank will finance part of the expansion through loans, while the remaining investment will come from the company’s internal resources. Sarbottam has obtained a credit rating for loans worth Rs 2.34 billion. According to Infomerics, the company’s A3 rating reflects its strong ability to meet debt obligations.
Alongside the expansion, the company also plans to move ahead with an initial public offering (IPO) next fiscal year. Sarbottam is preparing to issue shares to the public through the book-building process and has already begun preliminary discussions regarding indicative pricing, although final approval is expected to take time.
The company aims to apply for the IPO during the Shrawan-Bhadra period of the upcoming fiscal year, along with its latest financial statements. Established in 2005, the company was converted into a public company in 2021.
Sarbottam Spinning Mills is considered financially strong. The company has already cleared all of its previous loans and posted a net profit of around Rs 370 million in the last fiscal year. Chairman Neupane said profit is projected to rise to around Rs 400 million in the current fiscal year. The company maintains an operating margin of over 15 percent and a similar dividend-paying capacity.
The improvement in profitability has been driven by stronger selling prices, lower raw material costs, the use of tax credits, and reduced interest expenses. The mill is currently operating at 98 percent of its installed capacity.
The company exports around 95 percent of its production. Out of last year’s total turnover of nearly Rs 4 billion, yarn worth Rs 3.8 billion was exported to India and Turkey. Nepali yarn manufacturers remain competitive and profitable because raw material and electricity costs in Nepal are lower than in India.
Tax and customs exemptions on imported raw materials, along with Nepal government export incentives ranging from 4 to 8 percent, have also significantly supported the industry. More than 80 percent of the company’s operating expenses go toward purchasing raw materials.
However, because the company is heavily export-oriented, changes in import tax policies in destination countries or revisions to Nepal’s export incentive and customs policies could pose risks to the business.
Located on 17 bighas of land along Lumbini Road in Bhairahawa, the factory currently employs around 1,050 workers, more than half of whom are women.
Since its establishment, the company has focused on innovation and premium spun yarn products, setting new standards in the industry. It has built one of the largest market portfolios for polyester spun yarn and poly-viscose blended yarn in both domestic and international markets.
Jagdamba Spinning Mills is a unit of the Saurabh Group, a diversified business conglomerate involved in a wide range of industrial activities. The company’s ownership structure includes Durga Neupane with a 30 percent stake, Bishnu Neupane with 21 percent, and Bhaibhav Neupane with 16 percent.
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