For the quarter ended March 31, 2013, revenues of Indo Rama Synthetics (India) Ltd., India’s largest polyester manufacturer, stood at Rs. 710.50 crores as compared to Rs. 796.08 crores for the corresponding quarter in the previous year. PAT stood at Rs. 38.06 crores (Rs. 35.47 crores), while EBITDA stood at Rs. 1.30 crores (Rs. 26.62 crores). The Board has recommended a dividend of 10 per cent to its shareholders.
According to a company press release, for the year ended March 31, 2013, revenues stood at Rs. 3,150.91 crores as compared to Rs. 3,176.06 crores in the previous year. EBITDA was at Rs. 282.45 crores (Rs. 319.06 crores). PAT increased to Rs. 41.26 crores from Rs. 31.96 crores for the corresponding period in the previous year. EPS stood at Rs. 2.72 (Rs. 2.11).
In the last financial year, the overall economic growth was flat and the margins were low due to the macro-economic challenges. However, the company continued to focus on internal efficiencies and cost optimization projects to counter the margin pressures during the year.
The higher cotton production and low consumption last year has resulted in a high inventory of cotton, which forced cotton prices to be lower. The PTA and MEG prices were higher because of the tight paraxylene situation, and the price benefits weren’t passed on to the customer, thus forcing the margins to be lower.
Though 2012-13 saw underperforming economies, sluggish growth, and emergency rescue efforts by most governments across the world, the situation seems improving now. Paraxylene prices have come down by 20 per cent, which has helped to bring down product prices and helped the company to pass the same to customers. The rupee depreciation will also help exports to grow and minimise the effect of excess capacity. All these factors will help the company improve the margin in the current year.
During 2012-13, Indo Rama Synthetics enhanced its draw texturized yarn (DTY) capacity from 71,200 tonnes per annum to 98,145 tonnes, with the addition of 14 machines. The company diversified into renewable power business through its step-down subsidiary, Indo Rama Renewables (Jath) Ltd., and installed a 30 mw wind turbine project in Maharashtra.
During the year, the company also commissioned a 11 mw steam turbine generator unit at its Butibori manufacturing facility, thus increasing CPP’s installed capacity to 41 mw. It signed a memorandum of understanding (MoU) with the Tamil Nadu Government for setting up a petro-chemical project for manufacturing purified terephthalic acid (PTA), polyethylene terephthalate (PET) resin and polyester staple fiber (PSF). The plant would be a single stream production value chain of polyester incorporated with the latest technology.
The petrochemical complex will manufacture 1.25 million tons per annum of PTA, 270,000 tons of PSF and 540,000 tons of PET, with capital investment of Rs. 5,000 crores.
The company is expected to consume 100 per cent of its PTA requirement for the polyester manufacturing complex at Butibori in Nagpur which will be about 40 per cent of the PTA plant capacity. The balance PTA will be used for captives and export or local sale depending on the market situation at that time.
Commenting on the company’s performance, Mr. O.P. Lohia, Chairman and Managing Director, Indo Rama Synthetics (India) Ltd., said: “Our persistent focus on customers and quality has helped us to counter the margin pressures, despite the decline in global trade, fluctuation in dollar and crude oil prices and adverse local market conditions. In the current financial year, we hope to see improvement in the overall economic environment as there is an optimism in the market because of depreciation in the rupee, which will help exports to grow and thus help us perform better in the coming quarters. With the domestic market picking up, we project that the market conditions will gain greater momentum going forward and will help the company to reach a new milestone”.