Cotton Spinning and Weaving Co to pump EGP 150m into 8 subsidiaries

(MENAFN- Daily News Egypt) The Holding Company for Cotton Spinning and Weaving has supplied new investments worth EGP 150m to develop a number of production lines at eight subsidiary companies this year.

Chairman of the company Ahmed Mostafa said that the holding company plans to supply
urgent investments to eight subsidiary companies in order to increase production capacity and operate a number of production lines that have been stalled for years.

The list of companies targeted for investment includes Misr Spinning and Weaving Company in Mahallah; El-Nasr Spinning, Weaving, and Dyeing; Misr Spinning and Weaving in Kafr El Dawar; Damietta Spinning and Weaving; Daqhalia Spinning and Weaving; Upper Egypt Spinning; El-Nasr Spinning and Weaving Shourbagui; El Nasr for Wool & Selected Textiles; and Stia.

Mostafa explained that the new investments, which will be funded from the holding company's treasury, will be designated for purchasing various equipment and machinery over a maximum period of three months. He said that the company will pump in investments throughout FY 2015/2016, and will not wait for the actual restructuring, which is set to take place in approximately one year.

The Holding Company for Cotton Spinning and Weaving aims to increase total profits among its subsidiary companies to EGP 4.5bn throughout FY 2015/2016, compared to the EGP 3.4bn recorded in EGP 2014/2015, representing an increase of 32%. Mostafa expects that the company will be able to cut losses by approximately EGP 400m during this period.

The Holding Company signed contracts to prepare restructuring studies for weaving companies at the end of last month, with Warner, and American consulting firm, as well as Egypt's Sahara Group.

The offices are scheduled to complete the studies within 11 months according to Mostafa, who estimated the initial costs of restructuring to be EGP 5bn. The funds will be provided by selling unused assets owned by subsidiary companies, which are currently being inventoried.

He explained that land owned by four companies was recently inventoried, pointing out that the final inventory for remaining companies will be completed before the consultancy firms complete their reports.

Through the reports, the consultancy firms will determine all companies' requirements, and how much investment is needed to help them shift to profitability.

Mostafa estimated the value of unused last to be worth approximately EGP 6bn. A portion of this sum will be paid to fulfil company debts to the National Investment Bank, while the rest will take the form of new investments.

Mostafa explained that the Holding Company formed a permanent committee to review the executive performance of consultancy firms in preparing studies, and pointed out that the committee supported the inclusion of representatives from all areas of specialisation, including spinning, weaving, clothing, cotton, finance, technology, and accounting.

On a related note, Mostafa said that the company agreed with four consultancy firms to produce a financial valuation of unused lands, and they are expected to complete their work in three months.

The holding company offered a bid to prepare restructuring studies for 25 subsidiary companies in September 2014. Five firms applied, two of which were global, while 15 took out bidding requirements.

The list of offices that took out bid requirements includes the Academic Center for Design, America's Warner, Dar El-Arab Consultants, and Sahara Marketing Group.

Warner and Sahara were selected by the committee that evaluated the offers provided by the five consultancy firms.

The restructuring plan will involve 25 of the Holding Company's 32 subsidiaries that have suffered losses, while seven profitable companies were excluded from the plans.

Daily News Egypt

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