Sri Lanka’s Hela Clothing continues global expansion and enters Egypt
Daily FT: Apparel giant Hela Clothing has become the first major Sri Lankan manufacturer to set up operations in Egypt in a bid to serve its customers better and boost revenues.
The foray into North Africa by Hela comes after successful entry and growth in East Africa, with operations in Kenya beginning five years ago, closely followed by Ethiopia.
Hela acquired a distressed asset – an apparel manufacturing factory in Alexandria in Egypt with 1,000 employees previously managed by a far eastern company. It is a vertical plant spanning 220,000 square feet with facilities for fabric and accessories manufacturing.
“Via the venture in Egypt, we hope to harness potential similar to Turkey’s apparel export market which amounts to US$ 20 billion. Via Egypt there is quicker access to European and US markets, reducing lead time,” Hela’s Clothing CEO Dilanka Jinadasa said, adding that a “few other leading Lankan apparel firms are likely to follow suit”.
The latest acquisition and entry into Egypt strengthens the 1991-incorporated Hela’s overall offering. At present Hela has two factories in both Kenya and Ethiopia, as well as seven in Sri Lanka (11 factories in total). It employs over 8,000 people in Sri Lanka and an equivalent number overseas.
Dilanka said Hela was also firming up two more strategic moves which would be made public over the next few months.
With the Egypt acquisition, Hela via its Mauritius registered investment arm Hela Investment Holdings has invested close to US$ 25 million in the past five years and increased its capacity to 1.2 million man hours with average year-on-year growth of 20%.
Hela specialises in the manufacture of underwear, sleepwear and children’s apparel. Among major clients of Hela are PVH Corp. – the parent company of fashion brands Tommy Hilfiger and Calvin Klein. Operations in East Africa and Egypt also focus on men’s underwear and bras.
Working towards a listing on the Colombo Stock Exchange (CSE) shortly, Hela’s performance so far this year has been impressive.
In July it saw exports from Sri Lanka grow by a massive 92% year-on-year as against a 3% drop for the local industry as a whole, whilst in the first seven months of 2021 the company’s growth was a substantial 79% vis-à-vis 21% growth by the Sri Lankan industry.
Dilanka said Hela had been able to navigate better amidst the third wave of COVID and resultant lockdown with its contingency planning and creation of back-up capacity. “We were able to demonstrate resilience and proactivity thereby further reinforcing the confidence our customers have in us,” he added.
“Originally we had our historically best month in June this year and it was beaten in July and then again in August,” Dilanka said, adding that the order book was now stretched up to January 2022. For FY22, Hela’s revenue forecast is just over US$ 230 million up from US$ 171 million last year and US$ 183 million in FY19. The forecast for FY23 is to exceed $ 280 million.
“The momentum so far points to exceeding our FY22 target.”
The global expansion of Sri Lanka’s Hela Clothing is testament to the growth of the country’s private sector through the years. Sri Lanka’s economy has been resilient to external and internal challenges through the years and has yet again shown its resilience despite the challenges posed by the global Covid 19 pandemic. In fact, many companies in the private sector have shown a growth momentum despite pandemic challenges due to Sri Lanka’s economic resilience. The country’s geographical positioning in the Indian Ocean, ease of doing business environment in the country and the many trade agreements as well as concessions enjoyed by Sri Lanka have helped the country become an emerging business destination in the South Asian region. Foreign businesses/investors could therefore explore the growing opportunities in Sri Lanka and look at forming partnerships or joint ventures with local businesses.
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