NDB nurtures entrepreneurship in nylon yarn industry

The contribution made by individual enterprises towards the development of an economy of a nation is substantial; hence an entrepreneurial culture is essential for the sustainable development of a nation. As such, NDB firmly believes that its contribution towards nurturing such enterprises to thrive in their respective fields of businesses forms a significant part of its responsibility in partnering with the national economic development.

In fulfilling its duty in this regard, NDB has been in the forefront of nurturing entrepreneurship among Sri Lankans, by extending not only the long-term financing required for the projects to be set up, but also with the a wide array of other financial assistance required for continued success of such projects such as working capital financing, trade finance facilities and insurance etc.  Hence, NDB is proud to be a financial partner in many success stories of Sri Lankan entrepreneurs.

The textile and garment sector plays a pivotal role as a driver of the Sri Lankan economy where approximately 40% of the country’s total industrial export earnings are contributed by this sector. Having identified textiles and garments as an important sector in the economy, NDB has supported this sector through accommodating both long term and working capital financing facilities to meet its funding needs. The total value of the facilities granted by NDB to the textile and garment sector as of present forms a significant part of its total lending portfolio.

During the first quarter of 2013, NDB’s Project Finance Division extended the financial support for a promoter with a dream to become an Entrepreneur by setting up a nylon yarn manufacturing facility in Sri Lanka.

Nylon yarn is considered as an important raw material used in garment manufacturing, glove manufacturing, upholstery and commercial applications. Nylon is the second largest Man Made Fibre (MMF) after polyester globally in terms of production and consumption. The major nylon producing countries are China, USA, Taiwan, South Korea, and Germany.

Marzook, who has a wealth of experience in garment manufacturing and particularly in nylon yarn manufacturing, approached NDB with a strong belief in NDB’s support to set up a nylon yarn manufacturing facility at the Katunayake Export Processing Zone under the name  Filotex Lanka Ltd.

Currently nylon yarn manufacturing in Sri Lanka is a monopolistic industry. The only company currently operating manufactures around 200 MT of yarn per month. However, the local demand for nylon yarn exceeds 1,500 MT of nylon yarn per month. As such 87% of the nylon yarn requirement is imported, mainly from China.

The project envisaged substituting part of the imported nylon yarn by setting up a factory with an increased capacity. Hence the existing factory building at Katunayake has been renovated and cutting edge twisting machines and texturising machines have been purchased. These machines are with German Technology and are more design capable, efficient and require less maintenance and labour. Using machinery with cutting edge technology provides Filotex the competitive advantage over both local and foreign competitors as well as the imports.

The production capacity of Filotex will enable the country to save direct foreign exchange of approximately US$ 1.9 m per annum. In addition Filotex will also be able to create local employment opportunities, thus contributing to the national economy through import substitution as well as employment creation.

The new nylon manufacturing facility is expected to add 150 MT of nylon yarn to the national production, increasing the total national production to 350 MT, which is 23% of the local demand. The total cost of the project was in excess of US$ 1.5 m and NDB granted a term loan facility for renovation the factory and purchase of machinery and also facilitated establishing of Letters of Credit for importation of machinery and working capital facilities. In addition, NDB has offered its wide array of working capital facilities required for the manufacturing process.

While taking pride in partnering with such enterprises in their success, NDB intends to extend its support for many similar upcoming entrepreneurs in the future to set up new ventures and thereby to contribute towards national economic development by nurturing the spirit of entrepreneurship.