The appreciation of the Indian Rupee somewhat affected the export margins during the quarter. However, with the recent announcement of the export package by the Government, the export margins should improve in the coming quarters.
The profitability of this quarter was also affected by the total impact of interest of Rs.18.68 crore and depreciation of Rs.34.41 crore for the capitalization of full capacity while the full production from the new plant has not yet fully been achieved.
As the production volume goes up in the coming quarters and depreciation continues to remain the same and interest cost comes down due to repayments, the profitability of the company will improve substantially in the coming quarters.
The new capacity addition in the Polyester Raw Materials like PTA and MEG will keep the Raw Material prices under control. However, for alterative fibres like cotton, the demand will exceed the supply in the coming few years because of lower production the world over and with reduction of acreage in US in cotton, the prices of cotton has gone up by 25 to 30% internationally in the last 6 months and is close to 3 year high and very close to 12 year high.
This will help in increasing the margins in Polyester from the current quarter and hopefully the company shall be out from the period of 3 years of low margin due to lower cotton prices and higher petrochemical prices.
The coming years will be healthier for the polyester industry as there is demand supply balance and there is no new capacity coming up in Polyester industry which shall keep the industry margins healthier for the next few years.
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Indo Rama Synthetics (India) Limited
marketing@alchempro.com
