The new venture, Far East Spinning Industries Ltd, will be the first company that will completely manufacture compact yarn in Bangladesh. As the company will be setting up a compact cotton yarn manufacturing plant on 40 bighas of land in Habiganj in the next one and a half years which will involve investment of the tune of approximate Tk150 crore.

Far East Spinning Industries, whose paid-up capital stands at Tk 45 crore, is sourcing finance through a syndicated loan of around Tk 100 crore from IDLC Finance and The City Bank.

Asif Moyeen; chairman of Far East Spinning, Selim RF Hussain, managing director of IDLC Finance; and Sohail RK Hussain, managing director of The City Bank, signed the term sheet on behalf of their companies in Dhaka recently.

Moyeen said that the compact yarn is a value-added product that reduces dyeing, finishing and processing costs for manufacturing finished readymade garments.

The construction work will start in January, while the state-of-the-art machinery from Germany will come in November next year. It will have 25,000 spindles with a production capacity of 14 tonnes of high quality yarn per day.

Time and use of water for dyeing of compact yarn will also be much lower, which, in turn, will reduce production costs. The value addition in the finished product will also be higher.

This project will be a green one, as solar energy and rain water will be used in the plant. They will set up the factory building under green building concept. Setting up of the compact yarn manufacturing unit under a green project will be another testimony of the country's strong backward linkage industries in the garment sector.

As there are many yarn manufacturers who produce compact yarn but on a limited scale. They utilise around 10 percent on average of their capacity for manufacturing compact yarn. Local manufacturers supply 95 percent of the country's total demand for yarn.

The commercial production at the compact cotton yarn manufacturing plant is expected to start in June 2016. The products will be sold in both the domestic and foreign markets.