IPO subscription of Shasha Denims Ltd (SDL), a sister concern of Shasha Group, one of the leading denim producers in Bangladesh will begin today (Sunday).
The company will raise Tk 1.75 billion.
Export-oriented Shasha Denims plans to expand its production capacity by 1.0 million to 2.8 million (10 lakh yards to 28 lakh) yards in the next one and a half years by spending 88 per cent of the fund to be raised from initial public offering (IPO).
"We will go for a major expansion and improve the quality of denim fabrics by installing modern machinery with the IPO funds," Managing Director of Shasha Denims, Shams Mahmud told a group of reporters when they visited the factory in Dhaka Export Processing Zone Saturday.
The IPO subscription of the company will remain open till December 21 for the resident Bangladeshi while it will continue till December 30 for the non-resident Bangladeshi.
The denim producing company is set to offload 50 million ordinary shares at an offer price of Tk 35, including a premium of Tk 25 for each Tk 10 share and raise the said amount. A market lot is 200 shares and IPO applicants have to pay Tk 7,000 for single IPO lot.
Md Jamal Abdur Naser, a director of the company said there is a huge demand-supply gap for denim fabrics both at local and international markets.
"Being one of the high quality denim fabric producers in the country, we want to exploit the opportunity," he added.
Every month, 25 local makers produce 30 million yards of denim fabrics while the demand is nearly 60 million yards, he said.
To fulfill the demand, 30-35 million yards of such fabrics are imported every month at $75 million on an average from different countries, including China, India and Pakistan.
Shasha Denims has around 15 per cent of Bangladesh's market share, after Partex Denims with 17 per cent, followed by Envoy Denim with around 13 per cent.
Bangladeshi entrepreneurs also supply denim to major retailers and brands, including H&M, Uniqlo, Levis, Nike, Tesco, Wrangler, s.Oliver, Hugo Boss, Puma, Primark, JC Penney, C&A, Tommy Hilfiger, Inditex, Walmart, M&S, Calvin Klein, Diesel, Gap, Channel, Dior and G-Star.
Mr Naser said buying denim fabrics from local sources is a major way for manufacturers to reduce lead time for shipment.
"So, we are focusing on producing quality denim fabrics so that it helps the local users be more competitive in the international markets."
Shasha Denims was incorporated as a private limited company in 1996 and converted into a public limited company in the next year.
It is engaged in manufacturing different types of classical indigo denim (denim fabrics) through the integrated manufacturing process of weaving, dyeing and finishing.
The main raw material used for the production is yarn, which the company imports mainly from China, India and Pakistan.
From the raised funds, the company, which started commercial production in 2000, the denims maker also repay bank loans 10.42 per cent, and bear the expenses of the IPO proceedings of 1.58 per cent from the IPO fund.
The company's earnings per share stand at Tk 3.73, while its net asset value is Tk 52.95, according to the audited financial statement for the year ending on December 31, 2013.
AFC Capital and Imperial Capital will jointly manage the issue for Shasha Denims's IPO.
Presently, a total of 37 textile and garment companies are listed on the Dhaka Stock Exchange (DSE) with around 5 per cent of the total market capitalisation.
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