EGYPT: El Nasr Clothes of Egypt Is Seeking Funds for Restructuring

"We're considering raising funds; these funds could come from the sale of an asset, capital increase or a loan and the board will decide," Chairman and Managing Director Amr El Sharnoubi said in an interview at his Cairo office on Sept. 21. "We will present our proposal at the next board meeting on Sept. 28 for restructuring and investment for upgrading our new machinery."

El Nasr, also known as Kabo, is qualified to export clothes to the U.S. under an agreement that includes incorporating Israel -made components, El Sharnoubi said. "That's what we're trying to do now; to export to the U.S.." he said. "Of course we will make use of the QIZ."

Egypt garment exports to the U.S. doubled since 2005 when the U.S. allowed goods made in the so-called Qualified Industrial Zone in Egypt, using Israeli inputs, to benefit from duty-free access to its market.

Machinery at El Nasr hasn't been upgraded in at least 10 years and has led to wasted fabrics and increased costs, El Sharnoubi said. The machinery only works at 50 to 60 percent of capacity because there isn't a market for smaller size knitwear that they can produce, he said. "I think we will reach 70 percent by January."

The company has a capacity of 15 tons per day for both knitting and dyeing, he said.

Sales Increase
El Nasr's sales may increase 15 percent to 180 million Egyptian pounds ($31.5 million) in the financial year that ends June 30, 2011, because of better administration, he said. El Sharnoubi declined to say how much money the company was seeking to raise for investment.

El Nasr had a net loss of 13.3 million Egyptian pounds in the financial year that ended in June, compared with a loss of 7.2 million pounds in the same period last year, the company said in a regulatory filing to the Egyptian Exchange on Sept. 8.

Shares of El Nasr increased 2.4 percent to 1.27 Egyptian pounds at 1:37 p.m. in Cairo, valuing the company at 430 million pounds. The shares have dropped 14 percent this year, compared with an 8.3 percent gain in the country's benchmark EGX30 index.