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 industrialised 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."
"Such extra judicial vigilantism cannot be condoned at any cost," the military's press wing said, adding that the chief of the army staff had ordered full support to the civil administration to bring those responsible to justice.
A Punjab police spokesman said more than 100 arrests had been made including the prime suspect, who he said was seen in videos torturing the Sri Lankan manager and instigating the people against him.
Mob killings over accusations of blasphemy - a crime that can carry the death sentence - have been frequent in Muslim-majority Pakistan.
Friday's killing came only weeks after days of violent protests by the radical Tehrik-e-Labaik Pakistan movement, a Sunni Muslim group founded in 2015 to address actions it considers blasphemous to Islam.
Tahir Ashrafi, Khan's adviser for Interfaith Harmony, condemned the killers in a recorded video statement shared on social media.
"It is a barbaric act and against Islam's teaching," he said.