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SVP Textiles Plc, an Indian Company, has started construction of a 10-billion Br textile plant on a 50ha plot in the Kombolcha Industrial Zone, Kombolcha town, in the Amhara region.
The company will invest 70pc of the total cost to acquire high-end machinery, with which it could process up to 280 tonnes of cotton a day at full capacity, said Ketan Jani, general manager of SVP, speaking at a press conference at the Hilton Hotel on Thursday, May 1, 2014.
Owned and operated by the Shrivallabh Group of India, SVP’s Ethiopia project is supported by a 23 million dollar loan from the Development Bank of Ethiopia in its first phase, which will cost it 45 million dollars, said Vinod Pittie, Chairman of SVP Textiles.
The primary product of SVP will be cotton yarns of variable specifications depending on the end user demand, Jani said.
The Indian Company selected Kombolcha because of its proximity to Metema (897 km from Addis Abeba in the North Gondar Zone of the Amhara Region) and Humera (977 km from Addis Abeba, on the border between North Gondar and Western Tigray), where cotton is grown in significant quantities.
A promise by the government that the Industrial Zone will be provided with around-the-clock electricity services and ready installed facilities, such as water, coupled with the availability of cheap labour, convinced SVP to invest in Kombolcha, Pittie said. The factory could employ 3,000 people.
Despite problems of power cuts in the month of April, the government has been rectifying the situation to avail an uninterrupted flow of electricity, says Abere Abera, mayor of Kombolcha town.
“For a textile plant like SVP, power is the most important ingredient,” says Pittie. “With the government’s promise, we have decided to be located in Kombolcha.”
The company looks forward to exporting its yarn to Germany, Italy, Sweden, Turkey and the USA, particularly eager to benefit from the exemption for Ethiopia of 17 to 18pc anti-dumping duty in Turkey.
“This will be a big plus for the industry and will significantly contribute to the government’s plan to double the export revenue in the coming budget year,” Tadesse Haile, state minister of Industry, said.
The 50ha plot was given to SVP back in August, 2012 – a month after it had applied.
The government expects to meet its annual export revenue target of 500 million dollars from the industry. Despite expecting 219 million dollars from the export of textiles over the last nine months, the government actually collected 85 million dollars – 38.7pc of its plan.
The revenue for the first quarter of 2012/13 was 19 million dollars; that year, the annual total revenue of 99 million dollars was significantly short of the 357 million dollars the government had targeted.
BY HIWOT SEYOUM
FORTUNE STAFF WRITER
PUBLISHED ON MAY 4, 2014 [VOL14,NO731]