Shares of Kitex Garments hit a 10% - topping to Rs 164.10 on the BSE this morning after the company announced that the Telegana government has approved its expansion plan.
"The proposal submitted by Kitex Garments before the Telegana government for its expansion plan has been approved," the company said in a statement. It said a government order will be issued within a few days.
The rationale behind the expansion plan is ease of doing business, use of better logistics and infrastructure facilities; government incentive and subsidy schemes, proximity to raw material sources; lower labour costs and availability, and overall lower costs and consequently higher profitability in the long run.
As of 09:30; a total of 210,000 ordinary shares had changed hands on the NSE and BSE. According to the exchanges, pending warrants to buy 420,000 shares have been pooled.
On July 13, 2021, Kitex Garments said the company had agreed in principle to invest Rs 1,000 crore to set up garment manufacturing units in the state of Telegana, which would create 4,000 additional jobs over the next 2 years. "With liberal government policies, availability of raw materials and various incentives offered by the state, the company expects to reduce its operating costs, shorten the payback period and increase profits," the company said.
However, the stock has since shown a decline and closed at Rs 149.20 on Wednesday (September 1), up 34 per cent from its 52-week high of Rs 224.45 on July 13, 2021.
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Kitex Garments is engaged in manufacturing and exporting garments. The company manufactures various types of garments such as shirts, trousers, jackets, innerwear and outerwear. The company also exports infant and children's clothing and jackets to the US.
"Since the company deals in children's clothing, we expect business to grow at a good pace and there is an opportunity to get good new orders from existing/new buyers from all over the world, given the trade war between the US and China. We are constantly monitoring the current situation to seize opportunities and are also prepared to face any challenges," says the annual report for the financial year 2020-21.