Net sales for Q2 2012-13 stood at Rs 734.50 crore as against Rs 771.71 crore in Q2 of previous year. The sales have been marginally lower than same quarter previous year due to weak export demand on account of disturbances in European and Middle-east markets. The company recorded Profit after Tax at Rs 103.59 crore in the quarter as compared to Loss after Tax of Rs 22.84 crore in Q2 of the previous year. The company managed to maintain the margins at the levels seen in Q2 of previous year.
The repayment of loans brought down the finance costs substantially, as compared to previous quarters. The profitability in the quarter was boosted, primarily by strengthening of rupee and reversal of mark to market losses incurred in the previous quarter as the rupee moved up from Rs 55.62 / $ to Rs 52.86 / $.
Overall, in H1 2012-13, the company delivered a net sales performance of Rs 1488.63 crore, a modest increase of 6.9% over Rs 1392.36 crore in H1 of previous year, despite a lack luster market. The Profit after Tax jumped up to Rs 77.49 crore which is an increase of 171% as compared to Rs 28.60 crore in H1 of previous year.
With the Polyester prices bottoming out in the quarter and the upward movement in cotton prices, the company expects to see improvement in demand in Q3 FY2012-13.
The current stability and strengthening of the rupee, if sustained, will have a positive impact on the margins.
The company successfully completed some key margin improvement projects during the quarter. The project to add 11MW of Power to utilize the spare boiler capacity for captive consumption has been successfully commissioned. The company has also successfully expanded its production capacity for value added product Draw Texturized Yarn (DTY) from the earlier 64,800 Tonnes to 98,145 Tonnes with the installation of 14 new machines. All the machines have been commissioned by end of this quarter.
As a diversification strategy into the Renewable Energy business, the Company through its step down subsidiary, M/s Indo Rama Renewables (Jath) Limited, has entered into a binding contract for setting up a 30MW Wind Turbine Project using Gamesa G?97 turbine, in the state of Maharashtra. The project with an estimated cost of Rs 225 crore is expected to commence commercial operations by March 2013.
Commenting on the Results, Mr. O P Lohia, Chairman and Managing Director, Indo Rama Synthetics (India) Limited said, "The company has demonstrated its resilience in these challenging economic times. The successful completion of our cost improvement initiatives will further add to our competitiveness. With the Polyester prices bottoming out and rupee stabilizing, we expect the sentiments and performance to only improve from hereon".
Indo Rama Synthetics (India) Limited is India's largest dedicated polyester manufacturer with an Integrated Manufacturing Complex at Butibori near Nagpur in Maharashtra, with capacity of 6,10,050 tonnes per annum of Polyester Staple Fibre, Filament Yarn, Draw Texturized Yarn, Fully Drawn Yarn and Textile grade Chips.
Indo Rama Synthetics (India) Limited
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