A police official in the eastern town of Sialkot, who spoke on condition of anonymity because of the sensitivity of the case, said investigators believed the attackers had accused the manager of blasphemy for tearing down a poster with Islamic holy verses.
"The factory workers tortured the manager," said provincial government spokesman Hassan Khawar. "A total of 50 people so far have been identified and arrested."
Khan condemned the killing and said he was personally overseeing the investigations and that those guilty would be punished.
"The horrific vigilante attack on a factory in Sialkot and the burning alive of Sri Lankan manager is a day of shame for Pakistan," he said in a message on Twitter.
Television footage showed crowds of hundreds of people in the streets of Sialkot, in the heart of Pakistan's most heavily industrialized region where much of the country's export industry is based.
Underlining the shock caused across the political establishment, Pakistan's powerful military also issued a statement condemning the "cold blooded murder."