The Board of Investment (BOI) has moved to reassure workers formerly attached to Hela Clothing (Pvt) Ltd and Foundation Garments (Pvt) Ltd that their jobs remain secure, days after parent company Hela Apparel Holdings PLC filed for a court-ordered winding up.
In a statement, the BOI confirmed that 3,674 employees, comprising 251 executives, 393 staff and 3,030 team members, had already been absorbed into Emerald Clothing (Pvt) Ltd under a group restructuring exercise completed before the winding-up filings, with continuity of service preserved.
The transfer took place in two phases, the BOI said, with 2,504 employees moved from the Palapathwela and Thihariya facilities and the Emerald head office effective 1 May, and a further 1,170 employees from the Naula and Ukuwela facilities and the head office effective 1 June. The BOI, which said it facilitated and monitored the process through its Industrial Relations Department, added that it would continue to engage with Emerald Clothing and other stakeholders to ensure a smooth transition.
The reassurance follows one of the more dramatic corporate collapses on the Colombo Stock Exchange (CSE) in recent years. Hela Apparel Holdings’ board resolved on 4 August to seek a winding up under the Companies Act, and separate petitions were filed in the Commercial High Court on 5 August in respect of the parent company and its two main operating subsidiaries. In its disclosure to the CSE, the company said its board had reviewed its assets, liabilities, liquidity, indebtedness and cash flow position and concluded it was unable to meet its debt obligations, adding that restructuring, new investment and asset sales had all been explored and had failed.
It is a strikingly different story from the one Hela told investors less than five years ago. The company’s initial public offering opened in January 2022 at Rs. 15 a share, seeking to raise Rs. 4 billion for a 20.5 per cent stake and valuing the group at roughly Rs. 19.5 billion. It was the largest listing by value in over a decade and was oversubscribed by 5.4 times.
Group CEO Dilanka Jinadasa framed the listing around Hela’s transformation into an end-to-end apparel supply chain group with, in his words, a strong global footprint, particularly in Africa. The group had built manufacturing operations in Kenya, Egypt and Ethiopia alongside Sri Lanka, with the Kenyan investment in particular positioned to secure duty-free access to the US market under the African Growth and Opportunity Act.
The company’s own audited accounts show how quickly that footprint became a burden. Group revenue climbed from Rs. 32.2 billion in FY2020/21 to a peak of Rs. 95.3 billion in FY2022/23, and gearing fell from 4.0 times to 2.2 times in the year of listing as IPO proceeds were used to pay down debt. But profitability cracked almost immediately: the group swung to a net loss of Rs. 3.3 billion in FY2022/23, even as revenue was still rising, before a 26 percent revenue contraction in FY2023/24 and a partial, acquisition-driven recovery to Rs. 83.4 billion in FY2024/25 that still came with an operating loss of Rs. 15.7 billion and a group net loss of Rs. 22.9 billion.
That year also brought a visible retreat from the global ambitions of the IPO. In its FY2024/25 annual report, the company said it had ceased manufacturing in Ethiopia and divested two of its six Sri Lankan facilities as part of a restructuring of its private-label manufacturing division, while completing a Rs. 1.6 billion rights issue and integrating its 2024 acquisition of Focus Brands, relaunched as Hela Brands, into a new licensing division.
The boardroom churned alongside the balance sheet: four directors stood down during the year, and long-serving Chairman A.R. Rasiah, who had led the group since 2018 through its listing, announced his retirement effective 29 December 2025.
Auditors Deloitte declined to express an opinion on the FY2024/25 accounts, citing overdue trade payables, arrears on loan installments and breaches of financial covenants with a bank, against corporate guarantees of Rs. 38.2 billion provided across the group. As at 31 March 2025, the group’s current liabilities exceeded its total assets by Rs. 6.6 billion and it was sitting on a net liability position of Rs. 11.0 billion, a reversal from positive equity of Rs. 10.3 billion just a year earlier. The disclaimer noted that the going-concern basis rested on a proposed bank debt restructuring and a fundraising of Rs. 3.0-4.4 billion from strategic investors, neither of which auditors could verify as at their reporting date.
The nine months to 31 December 2025 showed no turnaround. Group revenue fell by close to 29 per cent year-on-year to Rs. 43.95 billion, gross profit more than halved, and the net loss widened to Rs. 7.59 billion from Rs. 6.46 billion, taking accumulated losses to Rs. 31.6 billion and group equity to negative Rs. 18.8 billion. The shares, which had already been placed on the CSE Watch List in December 2025, closed the quarter at Rs. 3.10, down from Rs. 5.90 a year earlier and a fraction of the Rs. 15.00 IPO price, valuing the group at just over Rs. 5 billion against a projected market capitalisation of Rs. 19.5 billion at listing.
The final months brought regulatory as well as financial reckoning. The Securities and Exchange Commission rejected a request to defer a trading suspension that took effect from 18 June, after banks and creditors did not approve the proposed debt restructuring, and the company subsequently disclosed that its board had shrunk to just two directors, well short of the five required under CSE listing rules. One market analyst’s assessment of that final stretch was blunt: by that point, the crisis facing Hela was arguably less about debt than about a collapse in governance itself.
Ahead of the court petitions, the group had already been selling down assets, including its UK-based Focus Brands business to shareholders of Emerald Investments for US$ 8 million, and moving Sri Lankan factory operations and staff to Emerald Clothing. In its last full financial year, Hela still generated export revenue of US$ 76.7 million, roughly 1.5 per cent of Sri Lanka’s total apparel exports, and at its peak the group employed more than 17,000 people worldwide, a number that had already fallen to around 12,400 before the winding-up filing.
Analysts attribute the collapse to a combination of a heavy debt burden, high interest costs, softening global apparel demand, the rising cost of running operations across multiple African markets, and a restructuring effort that came too late to secure fresh capital or lender support. For an industry still recovering from a difficult few years, Hela’s fall from landmark IPO to winding up in under five years stands as a cautionary marker, with implications reaching beyond its own balance sheet to the banks, suppliers and creditors tied to the group.
